Insurance contracts do not come cheap and most people who get insurance policies end up not paying their policies until such that it is already too late. The question is, can an insurer recover what he has paid when his insurance policy lapses, or is everything loss, and everything gained by the insurance company?

Insurance policies have non forfeiture benefits which provide that even if the owner fails to pay the policy and it lapses after a specific period, the insured or policy owner gets something from the policy. Under the non forfeiture clause of an insurance policy, the policy holder who fails to continue paying his premium has a choice of getting the cash surrender value of his insurance or the loan value. There are several non forfeiture options that are available to a policy holder but even if he fails to choose, the law provides that the specific non forfeiture value indicated in the insurance contract will automatically take effect.

In New York City, the law mandates the existence of a non forfeiture benefit for care insurance with long term payment options. Another non forfeiture option which is common for long term care insurance is the reduced paid-up benefit. This option provides that if the policy holder fails to pay his policy and it lapses after a specific period, the policy will still exist but the benefits reduced.

People should not get insurance policies if they are not sure they can continue paying the premiums. Of course, the non forfeiture provisions of insurance policies is an assurance that their payment will not go for naught but such provision will not ensure they will get the full benefits or their money back a hundred percent. Before signing any insurance contract, one should always check the specified period before the non forfeiture provisions may be availed of. It is also important to note that the policy holder will have to pay extra for the non forfeiture provisions.

Another important feature of an insurance policy is the settlement options or the choices available to the person insured or his beneficiaries as to how the insurance proceeds will be paid. To make things easier for his beneficiaries, the policy holder can choose a method by which the proceeds of the insurance will be paid to his beneficiaries upon his death. If he fails to do so, the choice is up to the beneficiary.

The owner of an insurance policy or his beneficiaries can choose to have the proceeds paid in lump sum or in installment basis for an agreed period with varying payment rates. The beneficiaries can also choose not to get the proceeds but only the interest of the proceeds which will be managed by the insurance company.

Others opt for a life settlement or viatical settlement. This is done when a beneficiary sells the insurance policy before it matures. The amount he gets though is lesser than the face value of the policy but it is a better option because while the sale value is less than the face value, it is nevertheless greater than if he opts for the cash surrender value. This type of settlement is more like investing for the future, just like when a person buys bonds and selling them later on.

People buy life insurance for protection, for savings purposes, for retirement and investment. While most people would want to be secure with their own insurance policies, the majority of them cannot afford to purchase one, or are hesitant because they are not sure if they can continue paying the policy for several years.

The options offered by the non forfeiture provisions of insurance policies offer these people an assurance that if they do fail to pay their policies and it lapses, the premiums they paid will not be wasted because they can still recover a portion of it or enjoy some benefits arising from the insurance contract.

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