The very moment you decide to surrender whole-life insurance policy, then your death benefit will cease to exist. No wonder the outstanding loan amounts are satisfied with the cash value before the payment is issued to the policy owners. Fortunately, some companies offer an annuity options in the nonforfeiture clause.
If you are looking forward to leveraging what the nonforfeiture clause has in store for the insured, then it in your best interest that you find out more about the different payout options available at your disposal. Luckily enough, that is what this simple guide will help you unearth today. Keep reading to find out more!
Cash Surrender Value
With the cash surrender value, the policy holder receives the remaining cash value within six months under the nonforfeiture cash payment option. In most cases, it is applicable to the savings element of whole life insurance policies payable before death. Either way, during the early years of a whole life insurance policy, there is a huge chance that the savings portion is going to bring very little return when compared to the paid premiums.
Extended-Term Insurance
With the extended-term insurance, the policy owner can use the cash value to purchase a term insurance policy with a death benefit similar to that of the original whole-life policy. One thing you should always keep in mind is that the policy is calculated from the insured’s attained age. Furthermore, the term policy will only end after a fixed number of years as specified in the policy’s nonforfeiture table.
Thanks to the extended-term insurance, you can quit paying the premiums without necessarily having to forfeit the equity of their policy. In addition, the amount of cash value built-in your policy is reduced by the amount of any loans against it.
The Bottom Line
Having an insight into the payout options under a nonforfeiture clause serves as the perfect opportunity to figure out what best fits your preference. Be sure to figure out how each one of them works before you can finally make up your mind to leverage one.
