What does the term "forfeit" imply in the context of insurance?

In the context of insurance, the term "forfeit" specifically refers to the act of giving up all rights to the policy. This can occur when a policyholder fails to meet certain obligations, such as not making necessary premium payments. When a policy is forfeited, the policyholder no longer possesses any rights to the benefits or coverage provided by the policy, effectively nullifying their engagement with that insurance contract.

Understanding this definition is essential, as it highlights the importance of maintaining the terms set forth in an insurance policy to retain its benefits. If a person forgoes their rights, they not only lose coverage but also any accumulated cash value or benefits associated with the policy, which can be crucial in times of need.