One important feature of life insurance can be found in the fact that many policy types, other than traditional term insurance plans, will generate a cash value. This cash value is important for a range of reasons, but it can also be applied to the issue of non-forfeiture.
As can be seen from the name of this Hong Kong life insurance benefit it will prevent the insurance policy being forfeited, and specifically a Non-Forfeiture Benefit will prevent the policy being forfeited, or taken away, in the event of a lapse of premium payments.
Traditionally, outside the benefits offered by a Grace Period, failure to pay the premium associated with a life insurance plan in Hong Kong would result in the policy being cancelled.
However, in the event that the life insurance policy provides a Non-Forfeiture Benefit then the policyholder’s failure to pay the required premiums will not cancel the policy. Instead, the plans built up cash value will be used to pay for the coverage for as long as the cash value lasts. As long as the cash value associated with the policy is used in this way the full death benefit offered by the coverage is maintained.
Please note that in some cases Hong Kong insurance companies may treat this application as an Automatic Premium Loan rather than a Non-Forfeiture Benefit.
Additionally, when a policyholder of a Hong Kong life insurance plan which has a built up cash value decides not to pay for the coverage anymore they usually have a number of options available.
The first option is to “Surrender” the policy and receive the Cash Surrender Value. The second option is to use the net cash value of the policy as a single premium to purchase a new insurance policy of the same kind, for a lower face value. The final option is to use the net cash value to purchase a term insurance policy for the total face amount of the original policy, for as long as the cash value lasts.
In the event that a policyholder decides to stop payments on their Hong Kong life insurance plan and receive the benefit of the policy’s non-forfeiture provision, they must notify the insurance company of their decision.
In the event that the policyholder does not notify the insurance provider of their intent to stop paying for the coverage any automatic actions described by the Non-Forfeiture benefit will be applied.
As such, it is in the policyholder’s interest to keep the insurance company informed of their intentions as much as possible, if the policyholder wishes to access the full range of options normally provided to them under a Hong Kong life insurance plan.
If you would like to receive a free quote for a Hong Kong Life Insurance plan which includes Non-Forfeiture benefits please complete the short form at the top of this page. You can learn more about our quotation process by clicking CCW Global Life Insurance Quotes.
In the event that you have additional questions regarding life insurance products in Hong Kong, or in relation to the operation to the exact mechanisms of a Non-Forfeiture benefit on a Hong Kong life insurance policy, please Contact Us to speak with an expert advisor today.