What do non-forfeiture provisions in life insurance policies guarantee?

Non-forfeiture provisions in life insurance policies are designed to protect policyholders from losing all benefits if they can no longer continue premium payments. These provisions guarantee that even if the policyholder decides to stop paying premiums, they will still retain some minimum benefits established by the policy. This could take the form of a reduced death benefit or a cash value that can be made available to the policyholder.

The essence of non-forfeiture provisions is to ensure that the policyholder has some value in the policy, despite any changes in their circumstances that lead to missed payments. This safeguard helps to mitigate the financial risk associated with policy lapse and ensures that the policyholder does not walk away empty-handed.

The other options do not accurately reflect what non-forfeiture provisions guarantee. For instance, the option involving the return of all premiums paid does not align with the typical structure of non-forfeiture provisions, which often allow for some benefits to be retained rather than a full refund. Similarly, increased death benefits or automatic renewals are not aspects typically addressed by non-forfeiture provisions. Instead, these provisions primarily focus on providing minimum benefits despite lapses in premium payments.