Under what nonforfeiture option does the company pay the policy surrender value and have no further obligations to the policyowner?

The cash surrender option allows the policyowner to terminate their life insurance policy and receive the surrender value, which is the accumulated cash value minus any outstanding loans or withdrawals. When the policyowner chooses this option, the insurance company has fulfilled its obligations under the policy, effectively ending the contract between the insurer and the insured. This means that the policyowner will no longer have coverage under that policy once the cash is received.

In contrast, other nonforfeiture options, such as extended term and reduced paid-up, maintain some level of insurance coverage even after the policy is not actively being paid for. The automatic premium loan option also allows the policy to stay in force by using the cash value to cover unpaid premiums rather than terminating the policy. These options are designed to provide continued protection and maintain a relationship with the insurer, which is not the case with the cash surrender option.