Which option allows a policyholder to maintain coverage at a reduced rate after cash surrender?

The option that allows a policyholder to maintain coverage at a reduced rate after cash surrender is reduced paid-up insurance. This option enables the insured to stop premium payments while still keeping a death benefit in force, although it will be less than the original policy's face value.

When a policyholder chooses reduced paid-up insurance, they essentially use the cash value accumulated in the policy to purchase a smaller paid-up policy. This provides the advantage of having ongoing life insurance coverage without the need for additional premium payments, based on the cash value that has built up over time.

The other concepts do not convey the same benefits. Paid-up additions refer to additional coverage purchased with dividends received from a whole life policy, but they do not represent a continuation of coverage after cash surrender. Extended term insurance provides a way to convert the cash value into a term insurance policy for a specified period but does not reduce the premium payments. Cash value accumulation simply describes the process of cash building up within the policy; it does not provide ongoing coverage after surrender. Reduced paid-up insurance stands out as the best choice for maintaining coverage at a lower cost after the policyholder decides to surrender.