These options are only granted with policies that accumulate cash value such as Whole Life Insurance and Endowment Insurance.
These are options which exist to prevent the lapsing or forfeiture of policies due to non-payment of premiums. Common non-forfeiture options include:
- Cash Value Option - Policy owner can receive the cash value accumulated under his/her policy if he/she chooses to surrender the policy (often subjected to a certain waiting period.)
- Reduced Paid Up Insurance - Policy owner can use cash values accumulated to purchase a single premium paid-up policy with a reduced sum assured at the rate attached to the age when this option is exercised. The paid up policy will also usually be non-participating in nature.
- Extended Term Insurance - Policy owner can use the cash value accumulated to purchase an extended term policy for a sum assured equal to that of the original policy. The length of the term is however, dependent on the cash value available as well as the owner's age as it will be based on the owner's current age. Thus, a policy with high cash value may end up with an extended coverage that would be in force for a longer period of time. This is useful for people who may be experiencing financial difficulties and have problems paying the premiums. Note that this option may not always be available to all policies.
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