Which non-forfeiture option provides the highest amount of insurance protection?

The extended term non-forfeiture option provides the highest amount of insurance protection among the options listed. When a policyholder discontinues premium payments but utilizes the extended term option, the accumulated cash value of the policy is used to purchase a term insurance policy for the same face amount as the original policy. This means that the extended term option maintains the full face value of the insurance for a specified period, allowing beneficiaries to receive the same coverage provided under the original policy in case of the policyholder's death during that term.

In contrast, the other options do not provide the same level of protection. The conversion option typically refers to a feature allowing policyholders to convert term insurance to permanent insurance, which isn't a non-forfeiture option in itself. The decreasing term option involves a policy where the coverage amount reduces over time, thereby providing less insurance protection as the term progresses. The reduced paid-up option converts the policy into a paid-up policy at a lower face value, which also results in less overall insurance protection compared to the extended term option.