What are the three non-forfeiture values in a permanent policy?

In a permanent life insurance policy, non-forfeiture values are important components that provide policyholders with options if they decide to discontinue paying premiums. The three primary non-forfeiture values are cash surrender value, paid-up insurance, and extended term insurance.

The cash surrender value is the amount of money a policyholder receives if they decide to terminate the policy before its maturity. This value accumulates in the policy as premiums are paid and can be withdrawn or taken as a payout.

Paid-up insurance refers to a reduced amount of insurance that the policyholder can retain by using the accumulated cash value to continue the coverage without further premium payments. This allows policyholders to maintain some level of protection even if they can no longer afford full premiums.

Extended term insurance allows the policyholder to use the cash value of the policy to purchase a term life insurance policy for a set period. This is beneficial for those who want to maintain coverage temporarily while not actively paying premiums on their original policy.

Understanding these non-forfeiture values is vital for policyholders as it provides strategic financial options even in circumstances where they may face challenges in continuing their premium payments.