Final answer:
C) Reduced paid-up insurance.
The option that allows the policyowner to use the accumulated cash value to pay future premiums is Reduced paid-up insurance.
Step-by-step explanation:
The option that allows the policyowner to use the accumulated cash value to pay future premiums is Option C) Reduced paid-up insurance.
When a policyowner chooses reduced paid-up insurance, the cash value of the existing policy is used to purchase a new policy with a lower death benefit and no further premium payments required. The accumulated cash value is enough to cover the cost of the new policy's premiums.
For example, let's say the original policy had a cash value of $10,000 and the premiums were $1,000 per year. If the policyowner chooses reduced paid-up insurance, the $10,000 cash value would be used to purchase a new policy with a lower death benefit, and no further premium payments would be required.