What are "nonforfeiture benefits" in life insurance policies?

Nonforfeiture benefits in life insurance policies are essential features designed to protect policyholders by ensuring that they do not lose all the value they have built up in their policies if they decide to stop making premium payments. These benefits guarantee that even if the policyholder ceases to pay premiums, they can still receive some form of value from the policy. Essentially, nonforfeiture benefits might allow the policyholder to convert the policy into a reduced paid-up insurance option, use the cash value to pay premiums, or receive the cash value as a payout.

The other options do not accurately capture the essence of nonforfeiture benefits. While benefits to encourage policy renewal might be a part of overall life insurance strategy, they don’t relate specifically to what happens when premiums are no longer paid. High-value policies can certainly include nonforfeiture benefits, but these benefits are not exclusive to them; they apply to various types of life insurance. Therefore, the recognition that nonforfeiture benefits provide value if premiums are halted is a critical aspect of ensuring that policyholders feel secure about the investment they have made.