Chartered Life Underwriter Practice Exam 2025 - Free CLU Practice Questions and Study Guide

Non-forfeiture options in life insurance refer to provisions that allow policyholders to retain some value of their policy even if they stop paying premiums. These are designed to protect policyholders from losing all benefits upon lapsing a policy due to non-payment. By providing alternatives like cash surrender value, reduced paid-up insurance, or extended term insurance, non-forfeiture options ensure that the policyholder still has access to some benefits based on the accumulated value of the policy.

The other options do not accurately describe non-forfeiture options. Increasing premium payments over time relates to different types of policies or riders but does not address value retention. Benefits payable upon accidental death are specific to certain policy types but are unrelated to the concept of non-forfeiture. Immediate cash payouts suggest a different mechanism, like a cash value withdrawal, rather than the preservation of policy benefits when premiums are no longer paid.