IIQE Paper 3 Explaining the Life Insurance Policy question: policyowner stops paying premiums on a whole life policy with a HK$1,000,000 face

Answer: D. HK$1,000,000 of term cover for as long as the net cash value can fund

Answer: HK$1,000,000 of term cover for as long as the net cash value can fund. With extended term insurance, the policy's net cash value pays a one-off premium for term cover of the original face amount, for whatever period that value can buy.Why not the others:• the cash surrender value paid out in one sum: Paying out the value is the cash surrender option, not extended term.• whole life cover of a lower amount for the rest of life: Same plan at a lower amount is reduced paid-up insurance.• term cover of a lower amount running to the original expiry date: Extended term keeps the original amount; it is the period that varies.Watch out: Thinking extended term reduces the amount; it keeps the amount and limits the period.Rule: Extended term insurance: original face amount, term cover, period set by what the net cash value can buy.Source: IA Long Term Insurance (Paper III) Study Notes, 2022 Edition (8th ed., June 2022; for exams from 24 Oct 2022), 4.5(b)(iii), p. 4/5