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 ?
When the loan value is so small that it will not even cover a monthly premium, nonforfeiture benefit options will apply.
1) The cash value of the policy is also known as the nonforfeiture value since this is the least amount the insurer can pay to a surrendering policyholder.
For example, if the plan had used higher interest rates or a mortality table with shorter life expectancies to determine the annuity amount, then the amount that exceeded the benefit derived would have been subject to the nonforfeiture rules and would have been included in the employee's annual benefit.
The nonforfeiture provision shall be appropriately captioned;
State laws specify standard nonforfeiture options that companies must offer to policyholders, while the Internal Revenue Code offers certain tax advantages for policy ownership.
The charity may find that the life settlement is a better alternative to either surrendering the policy or exercising one of its other nonforfeiture options.
nonforfeiture values: Those values or benefits in a life insurance policy that by law the policyowner does not forfeit, even if he or she chooses to discontinue payment of premiums.
nonforfeiture provisions (cash surrender, extended term and paid up insurance);
Nonforfeiture benefits--Some policies offer this benefit, which is designed to allow a policyholder to stop paying premiums into the policy without losing all benefits and coming away from the situation having paid premiums but having no current coverage.
A policy may also offer optional benefits, including different nonforfeiture benefits that return some value in the event of termination due to discontinued payment of premiums.
Contingent nonforfeiture benefit option provides a shortened benefit period if the policy lapses after three years due to nonpayment of contributions.
Among the improvements to the policies offered in California are the removal of the mental health exclusion from the Preferred Advantage product series, the revised nonforfeiture benefits that provide for a minimum nursing facility benefit after three years of premium payment, and the redefined simple and compound inflation computations.