Nonforfeiture Options

Cash Surrender

The insured can request the cash value to be paid to them. This would surrender the policy. This is the most common option. Note: Tax may be owed on any gain. Note: The insurance company can delay payment for up to 6 months.

How many nonforfeiture options are there

There are three, Cash, Reduced paid-up, and extended term also known as automatic nonforfeiture.

Reduced paid-up

When the policy lapses, the cash value is used to buy a new Whole Life policy with a lower face amount that will be fully paid for. Note: There is no commissions made.

Extended Term also known as the automatic nonforfeiture option

When the policy lapses, the cash value is used to buy a term policy with the same face value. This is the option chosen if the client does not communicate what is wanted if a policy lapses hence automatic nonforfeiture.