What do non-forfeiture options in life insurance provide to policyholders?

Non-forfeiture options in life insurance are designed to protect policyholders in the event that they are unable to continue paying their premiums. Specifically, these options offer benefits that ensure the policyholder does not completely lose the value of their policy due to non-payment.

For example, if a policyholder stops paying premiums, non-forfeiture options can allow them to receive a reduced paid-up policy, which provides some level of coverage without the need for further premium payments. Alternatively, the policyholder might have the option to receive a cash surrender value or take out a loan against the policy. These provisions help maintain a degree of protection for the policyholder's investment even in the event of lapsing premiums, making them an essential feature of life insurance policies.

In contrast, the other choices do not accurately reflect the purpose of non-forfeiture options. Guaranteed returns on investment and increased coverage limits are features related to the growth of the policy or its benefits but do not pertain specifically to the situation of missed payments. Policy cancellation options imply an outright termination of the policy, which does not encompass the protective aspect offered by non-forfeiture provisions during non-payment scenarios.