Nonforfeiture clause

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Nonforfeiture Clause

A clause in some insurance policies entitling a policyholder to receive the benefit, or a portion of it, for a short period of time after allowing the policy to lapse. That is, if the policyholder does not pay the premium as agreed, he/she is still entitled under a nonforfeiture clause to the benefit should the insured event occur within a certain, brief period of time. Alternatively, a nonforfeiture clause may entitle a policyholder to a partial refund of the premiums paid.

Nonforfeiture clause.

If there is a nonforfeiture clause in your insurance policy contract, and you have let the policy lapse because you haven't paid a premium that's due, you may qualify for the benefit named in the contract for a limited time, for a smaller benefit, or for a partial refund of your premium.

However, the added protection of adding a nonforfeiture clause generally increases the premium for the policy.

References in periodicals archive ?
The court ruled that the plan administrator's decision did not violate ERISA's nonforfeitability provision.
f) Must satisfy consumer protection provisions, disclosure, and nonforfeitability requirements as set forth by the National Association of Insurance Commissioners (NAIC).
In addition, the contract must satisfy certain consumer protection provisions concerning model regulation and model act provisions, disclosure, and nonforfeitability.
142) If, for instance, qualified defined benefit plans were bound by vesting schedules providing for 100% nonforfeitability of accrued benefits after eighteen months of service, (143) then workers, particularly those who frequently separate from their employers, whether voluntarily or involuntarily, will enjoy an increase in retirement savings.
A "qualified" long-term care insurance contract: (1) must provide only coverage for "qualified long-term care services"; (2) cannot pay or reimburse for services covered under Medicare; (3) must be guaranteed renewable; (4) cannot provide a cash surrender value; (5) must apply premium refunds or dividends to either reduce future premiums or increase future benefits; and (6) must satisfy consumer protection provisions, disclosure and nonforfeitability requirements as set forth by the National Association of Insurance Commissioners (NAIC).
1) The courts reasoned that a fraud exception to the nonforfeitability provisions of ERISA Section 203(a) and IRC Section 411(a) would be improper.
the contract satisfies certain consumer protection provisions concerning model regulation and model act provisions, disclosure, and nonforfeitability.
This includes the nonforfeitability requirements and the restrictions on distributions described in Regs.
The plan must meet the same requirements as apply to other qualified plans, with respect to coverage, nondiscrimination in contributions, nonforfeitability on termination, rules regarding forfeitures, and rules relative to the source of contributions.
Although certain technical exceptions exist to the nonforfeitability of vested benefits, but they are not relevant here.
Darden (24) is whether a life insurance agent should be considered an employee of the insurance company so that he or she may invoke this nonforfeitability provision.
Vesting refers to the nonforfeitability of employer contributions for covered employees.