What type of policy results when a policyholder chooses Extended Term Insurance?

When a policyholder selects Extended Term Insurance, the result is a type of term insurance. Extended Term Insurance is a non-forfeiture option that converts the cash value of a whole life policy into a term policy for a specified period. This allows the policyholder to continue having coverage without needing to pay premiums, using the accumulated cash value to fund the new term policy.

The converted term insurance typically offers a death benefit for a set duration and is only effective for as long as the cash value can maintain the coverage. This option is advantageous for policyholders who no longer want to maintain their whole life policy but still wish to ensure that they have survival coverage for a limited time without ongoing premium payments.

This option differs from permanent insurance, which provides coverage for the whole life of the insured and tends to build cash value over time. Temporary insurance typically refers to short-term coverage but not necessarily in the context of extending an existing whole life policy. Universal insurance is a form of permanent insurance that incorporates more flexible premium payments and death benefits, which does not align with the characteristics of Extended Term Insurance.