Nonforfeiture provision is a provision of life insurance policy, or of a statute applicable to such a policy, whereby a life insurance company is prohibited from issuing a policy which provides for the forfeiture of the same upon failure of the insured to pay a loan on the policy or interest thereon.
In the event of the lapse of the policy when it has a reserve value, the insured will be entitled under options as follows:
1) to receive the cash surrender value;
2) to have the insurance policy continue in force for the full amount for such a period of extended insurance as the reserve will purchase; or
3) to have the policy become a paid-up policy for such amount as the reserve will purchase.