What are the three nonforfeiture options in life insurance policies?

The three nonforfeiture options in life insurance policies are indeed cash surrender, reduced paid-up, and extended term.

When a policyholder decides to terminate their life insurance policy, nonforfeiture options provide them with alternatives to ensure they receive some value from their policy instead of losing everything.

Cash surrender allows the policyholder to receive the cash value of the policy at the time of surrender. This is particularly relevant for whole life policies, which accumulate cash value over time.

Reduced paid-up insurance enables the policyholder to convert their existing policy into a new policy with a lower face value, but without the need for further premium payments. This keeps the coverage in force while providing a benefit for the accumulated cash value.

Extended term allows the policyholder to use the cash value of their policy to purchase term insurance for a specific amount of time, effectively providing a temporary extension of coverage.

These options are essential because they safeguard policyholders' investment in their life insurance policies, offering them ways to benefit from their policy even if they decide not to maintain the original coverage.