The correct answer is: B. Surrender of policy in return for acquired surrender value.
A policy withdrawal is the surrender of a life insurance policy in return for the policy’s cash surrender value. The cash surrender value is the amount of money that the insurance company will pay the policyholder if they surrender the policy before it matures. The amount of the cash surrender value will depend on the type of policy, the length of time the policy has been in force, and the amount of premiums that have been paid.
A policy withdrawal can be a good option for policyholders who no longer need the life insurance coverage or who need the money for other purposes. However, it is important to understand that surrendering a policy will result in a loss of future death benefits. Additionally, the policyholder may have to pay surrender charges, which can reduce the amount of the cash surrender value.
Here is a brief explanation of each option:
- A. Discontinuation of premium payment by policyholder. This is not a policy withdrawal. A policy withdrawal occurs when the policyholder surrenders the policy, not when they simply stop paying premiums.
- B. Surrender of policy in return for acquired surrender value. This is the correct answer. A policy withdrawal is the surrender of a life insurance policy in return for the policy’s cash surrender value.
- C. Policy upgrade. This is not a policy withdrawal. A policy upgrade occurs when the policyholder changes the terms of their policy, such as increasing the death benefit or adding riders.
- D. Policy downgrade. This is not a policy withdrawal. A policy downgrade occurs when the policyholder changes the terms of their policy, such as decreasing the death benefit or removing riders.