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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
The Service noted that the plan would violate the non-forfeitability requirement of IRC Section 401(a)(7) and may violate other qualification requirements.
So to the degree that companies decide to approach retiree medical benefits through 401 (h), through some defined benefit or defined contribution plan, or through another type of qualified arrangement, they're clearly saying that these vehicles have had the blessing of the Congress for decades and that they take care of the issue of non-forfeitability.
I think any debate over cutting back the currently available vehicles would revolve around this issue of non-forfeitability, and whether the government wants to be involved in a partnership where there is no absolute certainty of benefit delivery to the participant.
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