For many people throughout the country, the tough economic times that began back in 2008 have showed little or no sign of easing any time soon. People everywhere have had to tighten their belts as business has slowed, layoffs have been commonplace and next year’s financial prospects have yet to look more favorable for the average person.
It goes without saying that the things many of us used to be able to afford to do, such as pay for our life insurance policies, have become increasingly difficult, if not all together impossible. So what happens if you’re no longer able to pay your life insurance premiums? This is where non-forfeiture benefits come in.
Without non-forfeiture benefits, the coverage provided by a life insurance policy will eventually end if a person has stopped paying their premiums. With most cash-value policies, there are non-forfeiture benefits that, when activated, you can use to maintain your insurance coverage or choose to take the cash value of the policy. There are a few ways in which this can happen, which we will explore below:
For those who can no longer afford to pay their premiums, one of the options available to them is taking an extended term. Instead of taking the cash that has been building in a policy, the policy owner can choose to put this cash value into the purchase of a term life insurance policy. This means that an individual can maintain their coverage just as long as there is still money to pay for the policy.
Or, one other option that’s available is what’s called ‘cash surrender.’ With this, the policy owner can choose to take the money that has been building in their life insurance policy. With this option, however, the individual’s coverage is terminated and they will be taxed on the money they receive.
Then, there is the single premium immediate annuity benefit. With this option, there will no longer be any insurance coverage on which to depend, but with the purchase of this benefit they can expect to receive a specific amount of cash each month for as long as they’re living.  This may be a good choice for those who need the continued stream of income.
To learn more about the options that are available to you if and when the time comes when you’re no longer able to continue making your insurance payments, contact