State RegulationsFL specificDifficulty 1/5
A Florida policyowner chooses the cash surrender nonforfeiture option. What happens?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Chapter 627, Florida Statutes, electing cash surrender terminates the policy: the insurer pays the accumulated cash value, less any outstanding policy indebtedness such as loans and accrued interest. Unlike reduced paid-up (smaller permanent face amount) or extended term (same face amount as term insurance), cash surrender ends all coverage in exchange for its equity. The net check is what the owner walks away with.
Why the other options are wrong
- A) Continuing with a reduced face amount describes reduced paid-up insurance, not cash surrender.
- B) Continuing as term insurance describes the extended term option.
- D) Cash surrender is a final termination, not a suspension.
Memory hook
Cash surrender = take the money, lose the coverage.