Final answer:
The nonforfeiture option is a legal requirement in cash-value life insurance policies, ensuring policyholders can access accrued benefits despite policy lapse.
Step-by-step explanation:
The guarantee that is required by law to be a part of life insurance policies that build cash value is the nonforfeiture option. This option ensures that a policyholder does not lose the accrued benefits if the policy lapses due to non-payment of premiums.
Cash-value life insurance policies like whole life insurance provide both a death benefit and a cash value accumulation, which the policyholder can use while they are still alive.
The nonforfeiture option typically allows the policyholder to receive a reduced paid-up insurance, an extended term insurance, or a cash surrender value if they choose to terminate the policy prematurely.
The guarantee that is required by law to be a part of life insurance policies that build cash value is the nonforfeiture option.
The nonforfeiture options are designed to protect policyholders from losing the cash value that has been accumulated in their policies if they decide to surrender or stop paying premiums. This option allows policyholders to receive a reduced paid-up insurance policy or a cash surrender value.