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When an individual is disabled at the time of policy discontinuation, they are generally entitled to an extension of benefits. This provision is in place to protect those who are unable to work due to their disability, ensuring that they continue to receive necessary support even if their original policy has ended.

This extension can vary depending on the type of insurance policy and the specific terms and conditions outlined in the contract, but the fundamental principle is that an active disability at the time of discontinuation warrants ongoing assistance. This is designed to prevent any gaps in coverage for those who are already vulnerable due to their health conditions.

In contrast, other options suggest scenarios that would not typically apply in these circumstances. Automatic termination of benefits does not consider the individual's disability status, which would be unfair to someone already relying on those benefits. Requiring individuals to apply for a new policy would not address their immediate needs, particularly if they are disabled and facing challenges that impede their ability to secure new coverage. Lastly, losing all eligibility for benefits would disregard the protections meant for disabled individuals, which are established to prevent hardships during difficult times. Thus, the principles of fair and equitable treatment in insurance clearly support the extension of benefits.