Non forfeiture

It refers to the kind of benefit offered to employees as a long-term care insurance policy that ensures if you lapse after a few years, you still retain the benefits of the scheme.

There can be two types of benefits if you buy a Nonforfeiture - firstly, a reduced paid-up benefit where if you lapse after a predetermined term, you will still get compensation with some reduced daily benefits, and secondly, a shortened period category where if you lapse, it will still cover all. It is similar to the extended-term policy.

How does the investment work? 

In the case of permanent life insurance, if you lapse, you are offered with following– Cash surrender where the insurance valuation is paid in full or partial, you are provided with an option to reduce the coverage term for the remaining, or, you can use the accumulated fund to pay the remaining future premiums or buy extended insurance with the accumulated cash value with no additional premium.