- Nonforfeiture Clause
- A clause in an insurance policy that allows for the insured to receive all or a portion of the benefits or a partial refund on the premiums paid if the insured misses premium payments, causing the policy to lapse. The nonforfeiture clause may only be in effect for a limited period of time, and may only kick in after the policy has been active for several years.
Nonforfeiture clauses can be found in standard types of life insurance as well as long-term care insurance. The clause may involve returning some portion of the total premiums paid, the cash surrender value of the policy, or a reduced benefit based on the amount of premiums that were paid up until the policy lapsed.
While nobody should plan on letting a policy lapse, a nonforfeiture clause can be a savior if somebody forgets to pay premiums or is unable to pay them for an extended period. Having a nonforfeiture clause will typically add to the premium amount over a similar policy without one.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
nonforfeiture — /nɒnˈfɔfətʃə/ (say non fawfuhchuh) noun a clause written into an insurance policy whereby the policy is not voided by non payment of a premium … Australian English dictionary
Values — The worth of a nonforfeiture clause that specifies that an insured party would receive the equity from a life insurance policy, in the event that the policy were canceled because the premium payments were not made. The policy s value would be… … Investment dictionary
automatic insurance — Protection under a clause in standard automobile liability policies which extends the coverage to the operation by the insured of cars acquired during the life of the policy by replacement and purchase. 7 Am J2d Auto Ins § 100. Insurance provided … Ballentine's law dictionary