Under which nonforfeiture option does the insurance company pay the surrender value with no further obligations to the policyowner?

The cash surrender option is a nonforfeiture provision that allows the policyowner to receive the accumulated cash value of their life insurance policy upon cancellation. When the policyholder opts for this choice, the insurance company liquidates the policy by paying the policy's cash value to the policyowner, effectively terminating the contract with no further obligations or coverage. This means that the policyholder walks away with the cash value, and the insurance company has no further responsibility for claims or benefits.

This option is appealing for individuals who may need access to cash immediately, as it provides a straightforward way to withdraw the cash value without retaining any insurance protection moving forward. It contrasts with other nonforfeiture options, which typically involve continuing some form of insurance coverage, thereby maintaining at least a minimal death benefit but limiting access to the full cash value.