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If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens
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43 votes
43 votes
If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens

User Raymond Valdes
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1 Answer

12 votes
12 votes

Answer:

The surrender cash value is used for the extended term option.

Step-by-step explanation:

This is where the nonforfeiture clause comes to policyholders aid. The nonforfeiture clause allows the policy holder who has not made payment of premiums within the grace period to be able to get the cash value of his whole life policy(with already paid premiums), recovered either by cash or extended term option or any other agreement made prior. The cash value of his whole life policy could be applied to the extended term option, allowing the policy holder to get a term insurance policy worth the value of his surrender whole life policy minus any loans against it.

User Danchez
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