How does the extended term value provision in my cash-value life insurance policy work?
All cash-value life insurance policies must include a provision that allows you to convert the built-up cash value of your plan into a paid-up term coverage for a limited number of years depending on age and cash value available. This option is typically called extended term value. Say your cash-value policy has lapsed, and now you want to purchase a term-life policy. If you exercise your extended term value rights, the insurer could use the built-up cash value of your old policy to provide term coverage at the same face amount for the number of years purchased afforded by the policy’s cash value.
