What does a nonforfeiture option allow a policyholder to do?

A nonforfeiture option allows a policyholder to avoid losing coverage when premiums are unpaid. This provision is crucial in ensuring that a policyholder does not entirely lose the benefits of their life insurance policy if they cannot make premium payments. Instead of letting the policy lapse completely, nonforfeiture options provide alternatives, such as converting the policy into paid-up insurance or a cash surrender value, ensuring that some level of benefit remains available even after the policyholder has stopped paying premiums.

This safety net is particularly beneficial in cases where financial difficulties arise, allowing policyholders to retain some form of coverage rather than facing a total loss. It reflects the principle of protecting consumers by providing them with options to maintain a degree of coverage despite payment challenges.