What is a non-forfeiture option (NFO)?
Traditional life contracts require payments to be made at the appropriate times. If a payment is not received, the insured has options to maintain his or her contract. This is a contractual option at the time of issue. There are several non-forfeiture options: • Automatic Premium Loan (APL): the premium is paid by a loan taken from your insurance policy’s cash value (this is the default NFO). • Reduced Paid-up (RPU): the contract’s face amount is reduced to an amount where no additional premium would be needed. • Extended Term Insurance (ETI): the contract is converted to term insurance. The contract’s value is used to extend this term coverage as far as the value will carry it.
