Under the extended term option, how is the death benefit provided?

• A. The death benefit increases beyond the original amount.
• B. The death benefit is preserved and provided by a term policy funded with the cash value.
• C. The death benefit becomes payable only if premiums are paid.
• D. The death benefit is reduced to zero.

Answer: (B)

The extended term option uses the policy’s cash surrender value to buy a term policy that provides the same death benefit as the original policy. In other words, the death benefit is preserved, but instead of being paid from the permanent policy, it is funded by a newly issued term policy purchased with the cash value. The coverage lasts for as long as the cash value can support it, and no further premiums are required for this extended term. If the term ends and no additional coverage remains, the death benefit would no longer be payable.