So, you are finally ready to access your policy’s cash value from nonforfeiture clause. Well, there is nothing wrong with taking this approach as it goes a long way in making sure you reap maximum benefits. For those who might not know, a nonforfeiture clause is an insurance contract provision that allows the insured to receive full or partial benefits or refund a portion of the premiums paid once the stipulated period expires.
Before you take advantage of what it offers, ensure you know about the different ways to access your policy’s cash value. Fortunately, that is what this post will help you attain today. Continue reading to find out more.
Automatic Premium Loan
First in line is the automatic premium loan, which happens to be a nonforfeiture option that allows the insurance company to access the cash accumulated in a permanent life insurance to pay the premium. Of course, this applies to a policy that is in risk of lapsing from an unpaid premium. The automatic premium loan is quite similar to a regular loan where you access the cash value of the policy.
However, the policyholder does not receive the funds personally, but they are rather earmarked internally by the insurance company. It is then that they are utilized to pay the outstanding premium on the policy. Keep in mind you can always set it up as the default nonforfeiture option at the time of application.
With the extended-term insurance option, you can purchase a term insurance policy using the same death benefits you initially had from cash value accumulated in the original policy. Actually, this happens to be the nonforfeiture option insurance company applies once a policy lapses. For many, it might seem like the most viable option whenever they want to retain their original death benefit amount without having to cater for additional premiums.
These are just but some of the ways in which you can access your policy’s cash value from nonforfeiture. Be sure to factor in the pros and cons of each before settling on one.