What happens when a policy is surrendered for its cash value?

When a policy is surrendered for its cash value, coverage indeed ends, and the policy cannot be reinstated. This is a standard provision in most life insurance policies that allows a policyholder to receive the accumulated cash value instead of keeping the insurance in force. Once the policyholder decides to surrender the policy, they effectively choose to terminate the contract, and as a result, the insurance coverage is lost permanently.

The reasoning behind this is that the surrender process typically involves the policyholder requesting a payout that reflects the savings component built up over time, which is paid out in lieu of ongoing insurance protection. Hence, after surrendering the policy, the insurer has no obligation to provide coverage, nor is there a mechanism to reinstate the policy as it is considered fully canceled.

In contrast, the other options present scenarios that imply a potential to regain coverage, which does not align with the nature of surrendering a policy for its cash value. This is why the selected response accurately reflects the outcome of surrendering a life insurance policy.