When going through standard life insurance and long-term care insurance covers, you will notice that they have what is called nonforfeiture clause. This is merely an insurance policy clause stipulating that the insured can receive full benefits or partial benefits when the premium can no longer be paid. Nonforfeiture simply refers to the state or  condition of not being subject to forfeiture.

In this simple guide, we will take you through some of the things you probably didn’t know about nonforfeiture options. Keep reading to unearth more before deciding on anything.

How Does a Nonforfeiture Clause Work?

To benefit from a nonforfeiture clause, the insured will have had to make premium payments for at least three years. Once this time lapses, a nonforfeiture clause can be activated in two ways. First and foremost, the insurance company can automatically apply the nonforfeiture clause since the policyholder failed to make premium payments. This is also possible when a policyholder decided to request the nonforfeiture to be invoked on his or her policy.

When taking advantage of permanent life insurance policies, your accumulated cash value can prove beneficial in these situations so you don’t end up losing all the money you put into the policy. You can access this accumulated cash value using a nonforfeiture option when the insurance company invokes the automatic premium loan option to pay the premiums due.

Things are no different if the policyholder opts for reduced coverage with a reduced death benefit called a reduced paid-up policy. And finally, it is possible to access the accumulated cash when the policyholder buys extended-term insurance using cash value surrender amount.

Keep in mind you can only enjoy the nonforfeiture benefit if the life insurance policy has accumulated cash value. As for the nonforfeiture clause with the highest amount of insurance protection, it will certainly narrow down to the specifics you want or need. The good news is all nonforfeiture options help the policyholder retain some or all of the value built in the original policy.