In terms of life insurance provisions, what does the term 'non-forfeiture' refer to?

The term 'non-forfeiture' in life insurance specifically refers to options that allow policyholders to retain some benefits or values accrued in their policy, even if they stop paying premiums or decide to terminate the policy. This provision ensures that the insured does not lose entirely the financial advantages they have built up over time, such as cash value in a whole life insurance policy.

When policies include non-forfeiture provisions, they typically offer alternatives such as converting the policy to a paid-up policy, which maintains a reduced amount of coverage, or receiving the cash surrender value. These options are crucial for policyholders who may find themselves unable to continue paying premiums yet still wish to preserve some value from their insurance policy.

In contrast, the other choices highlight different aspects of life insurance that do not align with the concept of non-forfeiture, such as penalties, beneficiary requirements, and defaulting on premium payments. These concepts are distinct and do not capture the essence of preserving value within the context of non-forfeiture options.