Definition of "Extended Term Insurance"

A form of insurance available as a non-forfeiture option. It provides the original amount of insurance for a limited period of time.

A nonforfeiture provision which uses the cash value of a permanent life insurance policy as a single premium to purchase term insurance in an amount equal to the original policy. The length of the term policy will depend on the age of the insured and the amount of cash value available. The effect of this option is to extend the same coverage for a period of time when premiums on the original policy are discontinued. A dividend option which uses the policy dividends on a par policy to purchase a one year term insurance policy. The amount of the additional coverage will depend on the size of the dividend and the age of the insured.