Once a permanent policy has cash value, the owner does not lose it by stopping payments. Three nonforfeiture options, mnemonic CRE:
Cash surrender value: cancel the policy and take the cash, minus any surrender charge and outstanding loans. The amount above the owner's cost (generally premiums paid minus dividends received) is taxable income. California lets the insurer defer paying the cash surrender value for up to 6 months after it is requested (§10160).
Reduced paid-up insurance: use the cash value as a single premium for a smaller, fully paid policy of the same type; no more premiums are due.
Extended term insurance: use the cash value to buy term insurance for the same face amount; how long it lasts depends on the cash value.
If the owner does not choose within 60 days after the missed premium's due date, the paid-up option named in the policy takes effect automatically (§10160(c)); in most policies that is extended term.
Related, but not nonforfeiture options themselves:
Automatic premium loan: if a premium is missed, the insurer pays it with a loan against the cash value, so the policy does not lapse.
Withdrawals (partial surrenders) in UL: amounts above the owner's basis are taxable.