Ohio Life Insurance pt6

prevent the loss of the cash value and apply when the policy is surrendered or lapses.

the policy is surrendered and the insurer simply pays the cash value to the policyowner in a lump sum. At that point, the policy is canceled, and the insurer's responsibility under the terms of the contract ends. Surrendered policies cannot be reinstated.

the insurer applies the cash value of the lapsed policy to buy a term insurance policy. The term insurance is bought in an amount equal to the face amount of the lapsed policy. The term coverage lasts for whatever period the cash value buys.An extended term option allows the policyowner to have insurance coverage for some period with no further premium payments required

Sometimes an owner of a lapsed policy that was issued on a standard basis fails to elect one of the nonforfeiture options. Insurers typically apply the extended term insurance option automatically when no other option is elected.

the lapsed policy's cash value is applied as a single premium to buy a paid-up policy of the same type as the lapsed policy. The paid-up death benefit is the amount that the cash value buys as a single premium at the insured's age. Returning to our example, if Ted elects the reduced paid-up option to apply his $12,000 in cash value, that amount will buy $28,000 of paid-up whole life coverage. The reduced coverage will apply for the length of Ted's life.

No option However, a UL policyowner always has the option of surrendering the policy for its full (or partial) cash value.