L&HCaliforniamedium
Under California's Standard Nonforfeiture Law for Life Insurance, which option must be available to a policyowner who surrenders a permanent life policy with cash value?
AOnly a cash surrender option, with reduced paid-up and extended term left to the carrier's discretion as optional features
At least one nonforfeiture benefit providing paid-up insurance or a cash payment, computed on prescribed mortality and interest assumptions
CA full refund of all premiums the policyowner has paid into the contract, reduced only by the insurer's reasonable administrative and acquisition expenses
DAn interest-free policy loan equal to one hundred percent of the policy's stated face amount, available on demand at any time
Why this is the answer
California's Standard Nonforfeiture Law for Life Insurance (Ins. Code §§ 10159.1-10159.20) requires every permanent life policy to provide nonforfeiture benefits — typically: cash surrender value, reduced paid-up insurance, and extended term insurance. The values must be computed using mortality assumptions (the prevailing CSO table) and the statutory maximum interest rate. Choice (a) wrongly says paid-up and extended term are optional. Choice (c) is wrong because nonforfeiture is not a premium refund. Choice (d) is wrong because policy loans are separate from nonforfeiture.
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