What is typically true about a 'surrendered policy'?

A surrendered policy refers to an insurance policy that the policyholder has chosen to terminate before its maturity. In this process, the individual opts to cash in the policy for its accumulated cash value, which is the amount available to the policyholder upon surrendering the policy.

When a policyholder surrenders their life insurance policy, they are essentially deciding not to continue with the coverage provided by that policy. By opting for this choice, they receive the cash value, which can be beneficial for immediate financial needs. However, this decision also means that the policyholder will no longer have insurance protection from that policy, and any benefits associated with it will be forfeited.

This option distinctly contrasts with the other choices presented. An active and in-force policy indicates the policyholder maintains coverage, which does not align with the definition of a surrendered policy. Extending coverage for an additional term implies an ongoing insurance relationship, which does not apply once a policy is surrendered. Lastly, although a beneficiary typically cannot claim benefits from a surrendered policy, the focus of the correct answer remains on the action taken by the policyholder to receive cash value.