Many whole
life and interest-sensitive whole life insurance policies carry an option
called non-forfeiture clause, which allows the insured to discontinue paying the
premiums, but instead use the value of the contract to maintain coverage of the
death benefit for an extended period of time. This is called an extended term
insurance policy. The actual cash value of an extended term insurance policy
(the cash value minus outstanding debts, i.e., policy loans plus any interest
due) will be used to purchase term insurance for as long as possible and used
for the amount of coverage available, minus any outstanding debts you have
under the original policy. Optional rates for the extended term policy are
provided within the policy itself.
