What does a nonforfeiture clause allow the insured to do?

A nonforfeiture clause is a provision in a life insurance policy that guarantees that the policyholder will not lose accrued benefits under certain conditions, particularly if they stop paying premiums. This clause typically allows the insured to access the cash value or to retain some benefits even if they decide to cancel their policy or if they miss premium payments.

Having a nonforfeiture clause means that policyholders have options such as taking the cash value of the policy, converting it to a reduced paid-up insurance policy, or using it to buy extended term insurance, thus ensuring they retain some value from their investment in the insurance policy. This is highly beneficial because it protects the policyholder from losing everything they have paid into the policy if their financial situation changes.

In contrast, the other options do not accurately describe the intention or function of a nonforfeiture clause. For instance, forgoing all accrued benefits would defeat the purpose of having such a protective clause. Redesigning the policy or changing the beneficiary are not functions provided by nonforfeiture clauses and typically involve different processes within policy management.