What is a non-forfeiture option in Variable Life Insurance?

A non-forfeiture option in Variable Life Insurance refers to a set of choices available to the policyholder that allows them to retain certain benefits even if they stop paying premiums. This is a crucial feature designed to protect the policyholder’s interests, ensuring that they do not lose all value from their policy in the unfortunate event that they cannot continue to make premium payments.

When a policyholder reaches a point where they can no longer afford to pay premiums, they may choose from various non-forfeiture options. These options could include converting the policy to a reduced paid-up insurance policy, where the death benefit remains in place at a reduced amount, or possibly receiving the cash surrender value of the policy.

This feature is significant as it provides financial security and flexibility, allowing individuals to make informed decisions about their policies without the fear of losing all previous investment made in premiums, thus supporting policyholders in maintaining some level of insurance coverage or value even under challenging circumstances.