What does the term "nonforfeiture" refer to in life insurance policies?

The term "nonforfeiture" in life insurance policies refers to benefits that cannot be taken away from the policyholder. This concept is crucial for policyholders as it ensures that they do not lose certain rights and benefits they have accrued over the life of the policy, even if they stop paying premiums. Nonforfeiture provisions typically allow the policyholder to receive a cash value, a paid-up insurance amount, or an extended term of coverage, depending on the terms of the policy.

Understanding nonforfeiture is essential as it provides financial protection and assurance to policyholders that their investment will yield some benefit, regardless of their future ability to continue premium payments. This contrasts sharply with other aspects of life insurance, where benefits may be ineffective if premiums are not maintained.