If an Adjustable Life policy owner makes an additional premium payment, how may the policy be affected?

When an owner of an Adjustable Life policy makes an additional premium payment, it can lead to an increase in the cash value of the policy, which may influence other aspects of the policy. The correct answer indicates that the nonforfeiture options may decrease, which highlights an important feature of Adjustable Life insurance.

In this context, nonforfeiture options are benefits that a policyholder can access if they decide not to continue paying premiums. These options typically provide some form of value, such as converting the policy to a reduced paid-up insurance or extending term insurance. However, when additional premium payments are made, the policy may become more favorable towards maintaining active coverage rather than reducing the policy’s face amount or converting it into a nonforfeiture option.

If the cash value increases due to the additional premium, it could potentially provide greater flexibility but may also shift how nonforfeiture options are structured, especially if the policyholder chooses to keep the policy active with higher values. In summary, the impact of an additional premium payment can ultimately lead to adjustments in how nonforfeiture options are approached, potentially making them less favorable if the policy remains actively funded.