If the policyowner chooses a cash surrender option, what happens to the coverage?

When a policyowner opts for a cash surrender option, it involves the decision to terminate the life insurance policy and receive its cash value. This process effectively ends the coverage because the policy is no longer in force. The recipient may receive a lump sum payment based on the accumulated cash value, but once this option is taken, the death benefit and any associated coverage cease immediately.

In contrast, other options presented would imply that some form of coverage continues or changes, which is not the case with a cash surrender. Paid-up insurance, a term policy conversion, or reduced coverage would each suggest some level of ongoing insurance, which does not align with the cash surrender outcome. The focus of the cash surrender option is to provide the policyowner with financial liquidity rather than maintaining any insurance protection.