What option allows a policy owner to surrender a whole life policy for a lesser amount of permanent coverage?

The option that allows a policy owner to surrender a whole life policy for a lesser amount of permanent coverage is reduced paid-up insurance. This option enables the policyholder to use the accumulated cash value of the whole life insurance policy to purchase a reduced amount of paid-up permanent insurance without requiring further premium payments. This is particularly useful for individuals who want to maintain some form of life insurance coverage while no longer being able or willing to pay premiums on their original policy.

Reduced paid-up insurance ensures that the policyholder can continue to have a life insurance benefit, albeit at a lower coverage level, thereby preserving their investment in the policy while adapting to changing financial circumstances.