What is a "non-forfeiture" clause in life insurance?

A "non-forfeiture" clause in life insurance serves to protect the policyholder by ensuring that they do not lose the benefits of their policy if they stop making premium payments. This clause typically allows the policyholder to access certain benefits, such as cash value or paid-up insurance, even after they have ceased premium payments due to financial hardship or other reasons.

This feature is particularly significant in whole life insurance policies, where the accumulation of cash value provides a safety net for the policyholder. If they can no longer afford to pay premiums, the non-forfeiture clause allows for the policy to remain in force or to convert to a form that still provides some level of coverage or financial benefit, ensuring that their investment is not completely lost.

The other options, while relevant to different aspects of insurance policies, do not accurately define what a non-forfeiture clause entails. The focus of a non-forfeiture clause is specifically on providing a safeguard against the loss of benefits when premium payments are halted.