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Which Of These Is Not A Nonforfeiture Option In A Life Insurance Policy?
What is nonforfeiture option in a whole life insurance policy? The simplest explanation is that when a person takes out a policy that has an expiry date, the premium paid is not considered to be a gift but a loan. If you were to default on this premium, the company can go after your assets in order to recoup some of their loss.
This is why it is important to know which of these is not a nonforfeiture option. A policy is never a gift and a policyholder cannot default on an existing policy. However, if a policyholder does default on an existing premium, they can be forced to surrender their policy. If they have a cash surrender value that is greater than the cash surrender value on their current policy, they will lose their accumulated cash value during the surrender period and then start all over with a new premium payment.
If a policyholder defaults on a premium for more than thirty days, they are required by law to surrender their policy. They cannot however, just walk away. Once the period ends, they must still pay the premium and must not surrender the policy. If they do, the life insurance company is allowed to pursue the premium and the claim. If they do not, they may be liable for a civil penalty and can be sued for their damages in small claims court.
The second of the two options that a policyholder has which a life insurance nonforfeiture option in a whole policy does not require them to surrender is the shortened term policy. This is another option available to policyholders. The term can be one year or ten or twenty years. If the policyholder makes good on their premiums during the shortened term, they will be able to surrender their policy. If they surrender, the premium will never be reduced.
The third option which a policyholder has which a nonforfeiture premium choice does not require them to surrender their policy is the whole policy. A whole policy is just like a universal life policy except it does not include accidental death benefits, death benefit premium payments are paid only for the cash surrender value and the premium payments are made directly to the insurer. They will not reduce the premium payments. They will, however, increase the death benefit.
Whichever of the above three options you choose as a nonforfeiture premium choice, they all have their pros and cons. Most of us in life insurance would prefer the latter, and although there are some policies which are better with one or the other of these it really depends on your own situation. There are some situations where a premium payment may be reduced but the death benefit will not be affected. That is, if you surrender the policy before the maturity date.
There is also auto insurance america rio rancho benefits that some people prefer and that is nonforfeiture with a premium reduction. This means that the premium payments will not be reduced but rather the death benefit amount will be increased. It is a good option for those who do not want to surrender their policies as of right but would like to retain them. You could for example keep a nonforfeiture option because of the extra premium payments you will receive upon maturity. It is important to note that this option is subject to the nonforfeiture rules which must be followed.
The best way to go about deciding which of these is not a nonforfeiture option in a life insurance policy is to discuss it with an authorized financial advisor. He will be able to tell you which among these is the best option and at the same time help you make the choice. There are certain guidelines that must be followed in this case. However, it is always better to keep an open mind and choose the best of options available
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