New York State Life Insurance Exam Questions Practice Question
Which of the following represents a reduced paid-up nonforfeiture option?
Correct Answer: A
Rationale: A represents a reduced paid-up nonforfeiture option because it allows the policyholder to maintain coverage with a decreased face amount without requiring further premium payments. This option effectively utilizes the policy's cash value to purchase a smaller amount of paid-up insurance.
Option B is incorrect as no further premiums are required once the policy is converted to reduced paid-up status.
Option C is misleading; the new face amount is reduced, not the same as the original policy.
Option D is also wrong since reduced paid-up policies do not include expense loading in the premium, as no premiums are owed after the conversion.
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