What is the primary benefit of choosing extended term as a nonforfeiture option?

Choosing the extended term as a nonforfeiture option primarily provides the highest amount of insurance protection available to the policyholder. This option allows the policyholder to use the accumulated cash value from a policy that has lapsed to purchase term insurance for a specific period, effectively allowing them to maintain coverage without needing to continue premium payments.

With this option, the policyholder does not receive a cash payout; instead, they secure coverage that typically matches the face value of the original policy for a certain duration, thus maximizing the amount of insurance protection available. This can be particularly beneficial for those who still wish to ensure their beneficiaries are covered in the event of their death, without the need to pay premiums on the original policy.

The other options are not accurate in this context. There is no cash value payout directly associated with the extended term option, it does not involve annual premium adjustments, and it does not convert the policy into whole life insurance. Rather, it focuses on utilizing the cash value to maintain a degree of life insurance protection in the form of a term policy.