Final answer:
The automatic nonforfeiture option in a life insurance policy is the extended term option, which allows the policy to be converted to term life insurance using the cash value after a lapse.
Step-by-step explanation:
The automatic nonforfeiture option is a provision in a life insurance policy that provides a default method of protection for the policyholder's cash value if the policy lapses due to nonpayment of premiums. By default, it operates without any action required by the policyholder upon lapse of the policy. The correct answer to the question is d. Extended term.
This option uses the policy's existing cash value to convert it into a term life insurance policy with the same death benefit, extended for a specific period. This period is determined by the amount of cash value available at the time of the policy lapse.