Which of the following best describes the concept of extended term insurance?

Extended term insurance is accurately described as a form of non-forfeiture option that extends coverage for a limited time. This option comes into play when a policyholder decides to discontinue premium payments on a whole life insurance policy. Instead of the policy lapsing or losing all value, the insurer uses the cash value accumulated in the policy to purchase a term insurance policy for the same face amount. This allows the insured to retain some level of coverage, albeit for a specified duration, without the need to continue paying premiums.

The concept of extended term insurance is particularly beneficial as it provides a safety net for individuals who may have financial difficulties or need to reduce expenses but still wish to maintain life insurance protection for a limited period. It is important to note that this option does not provide permanent coverage, but instead, it defers the loss of insurance benefits temporarily.