Definition of Nonforfeiture clause:
In an insurance policy, a clause that will allow for the insured individual to receive all or some of the benefits or a partial refund on the premiums that have already been paid if the insured stops paying their premium resulting in a policy lapse. Often a nonforfeiture clause will only stay in effect for a certain time period or it may only become active if the policy has been in force for a certain amount of time.
When the owner of whole-life insurance policy opts to surrender the policy, nonforfeiture options become available. The insurance company guarantees a minimum cash value for the insurance policy after a specific period—typically three years from when placed in force.
A nonforfeiture (sometimes hyphenated) clause is an insurance policy clause stipulating that an insured party can receive full or partial benefits or a partial refund of premiums after a lapse due to non-payment. Standard life insurance and long-term care insurance may have nonforfeiture clauses. The clause may involve returning some portion of the total premiums paid, the cash surrender value of the policy, or a reduced benefit based upon premiums paid before the policy lapsed.
How to use Nonforfeiture clause in a sentence?
- Permanent life insurance, long-term disability, and long-term care insurance policies may have nonforfeiture clauses.
- A nonforfeiture clause is an insurance policy clause stipulating that an insured party can receive full or partial benefits or a partial refund of premiums after a lapse due to non-payment.
- For traditional whole-life policies, the owner decides which of four ways they would like to access the policy’s cash value.
Meaning of Nonforfeiture clause & Nonforfeiture clause Definition