Which Nonforfeiture Options Preserve Policy Value?
Plain-English definition: A contract or law-based value, such as cash surrender or reduced paid-up insurance, available when certain permanent coverage ends.
Choices that can preserve value after premiums change
A nonforfeiture option preserves some contract value when eligible permanent coverage stops receiving required premiums. Available choices and amounts are set by the policy and law.
Nonforfeiture is different from reinstatement
Nonforfeiture options preserve value after a funding change. Reinstatement is a separate process for restoring lapsed coverage.
Keeping a smaller benefit instead of taking cash
Reduced paid-up coverage after payments stop
Instead of taking cash, an owner may choose a smaller amount of reduced paid-up insurance or extended term coverage, depending on the contract.
Request the amount and duration of every option
- Request values for every available option
- Compare benefit duration and amount
- Review tax and loan effects before electing
Compare ways to preserve existing value
Use reduced paid-up life insurance to see how this definition affects a real policy decision.
Terms to read alongside nonforfeiture option
Sources for understanding nonforfeiture option
This page explains general insurance usage. State law, the issued contract and the insurer's current records control a specific policy. Use the sources below to verify general terminology, then check the exact policy language.