Which is TRUE about the cash surrender nonforfeiture option?

Which is TRUE about the cash surrender nonforfeiture option?


a) Funds exceeding the premium paid are taxable as ordinary income.
b) After the cash surrender, the insured is covered for a grace period of 1 month.
c) The policy remains active for some time after the policyholder opts for cash surrender.
d) The policyholder receives the original cash value of the policy.

Answer: a) Funds exceeding the premium paid are taxable as ordinary income.

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