Which option allows the policy's cash value to be used to purchase a paid-up term policy upon surrender?

Extended Term Insurance is the option that allows the policy's cash value to be used to purchase a paid-up term policy upon surrender. In the context of life insurance, when a policyholder decides to terminate their whole life insurance policy, they can opt for Extended Term Insurance. This feature enables them to utilize the accumulated cash value to buy a term insurance policy at a higher face value, thus ensuring that coverage continues for a limited time without requiring additional premium payments.

This option is particularly appealing because it allows policyholders to maintain some level of insurance protection without incurring new costs. Extended Term Insurance essentially allows the policyholder to convert their existing coverage into new term insurance, thus preserving some benefits of the original policy.

In contrast:

• Cash Surrender Value refers to the amount of money a policyholder receives upon canceling a policy. While it is related to the cash value, it doesn't facilitate the purchase of a new policy directly.

• Paid-up Additions are additional amounts of insurance that can be purchased directly with the cash value, but they do not relate to a term policy.

• Policy Loan allows the policyholder to borrow against the cash value of the policy, which is different than utilizing the cash value to purchase a new insurance product upon surrender.

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