Arkansas Life and Health Insurance Practice Exam

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Prepare for the Arkansas Life and Health Insurance Exam. Utilize flashcards and multiple-choice questions with hints and explanations for each question. Get thoroughly ready for your certification test!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Alice finds she no longer is able to pay premiums on her $50,000 Whole Life Policy, but needs that amount of protection for her family. Which Nonforfeiture Option provides this protection?

Cash Surrender
Extended Term
Paid-Up Additions
Reduced Paid-Up Insurance

The correct answer is: Cash Surrender

The correct answer is A. Cash Surrender. Cash surrender allows the policyholder to terminate the policy and receive the cash value amount. In this scenario, Alice can use the cash value from her whole life policy to continue providing the $50,000 protection for her family by using the cash to purchase a term policy. This option provides the needed protection while also allowing Alice to access the accumulated cash in the policy. The other options are incorrect in this scenario because Extended Term, Paid-Up Additions, and Reduced Paid-Up Insurance do not provide the immediate cash needed to purchase a new term policy for the desired protection amount.