A policyowner stops paying premiums on a whole life policy with substantial cash value and does NOT elect a non-forfeiture option. Under the Standard Nonforfeiture Law for Life Insurance (NAIC Model #808), the default non-forfeiture option in most policies is:

Why this is the answer

NAIC Model #808 — the Standard Nonforfeiture Law for Life Insurance — requires a cash surrender value and a paid-up nonforfeiture benefit, and requires the policy to name the paid-up benefit that applies if the owner makes no election within 60 days of the missed premium. Policies typically offer three options: (1) Cash Surrender (lump-sum payout of net cash value); (2) Reduced Paid-Up Insurance (cash value buys a smaller whole life policy fully paid up); (3) Extended Term Insurance (cash value used as single premium for term insurance at the original face amount for as long a period as the value will purchase). If the owner makes no election, the policy's default is typically Extended Term Insurance, preserving the death benefit at full face for as long as feasible.