What is the definition of Extended Term Insurance Option?
The Extended Term Insurance Option refers to the option that the owner of a life insurance policy has to stop premium payments and instead use the policy’s cash value to buy term life insurance. This is a non-forfeiture option that allows the purchase of term insurance for the same face amount provided by the original policy for the length of time that the cash value can provide. The insurance company computes for the premiums based on the life expectancy of the insured. Also, the cash value referred here is the net cash value – meaning the cash value minus any related deductions.
