Standard Nonforfeiture Law for Life Insurance

What this document is

Standard Nonforfeiture Law for Life Insurance is a naic model law published by National Association of Insurance Commissioners (NAIC). It is one of the documents that insurance license exam questions are written from, including life & health practice questions. This page summarizes it and points to the official version, which is the text to rely on.

Sections cited in practice questions

Each practice answer shows the exact passage it comes from. These are sections of this document that questions cite, with a short excerpt from the source text.

• NAIC Model NAIC 808: Section 2A (Alternative Paid-Up Nonforfeiture Benefit)

  “the company may substitute, upon proper request not later than sixty (60) days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or...”

• NAIC Model #808: Section 5.A (Calculation of Adjusted Premiums)

  “the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts stated in the policy as extra premiums to cover impairments or special hazards, that the...”

• NAIC Model NAIC 808: Section 2C (Default Nonforfeiture Option)

  “That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make the election elects another available option not later than sixty (60) days after the due date of the premium in default.”

• NAIC Standard Nonforfeiture Law for Life Insurance, Section 5(A)(4), whole life comparison in the adjusted premium calculation

  “Twenty-five percent (25%) of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less.”

• NAIC Standard Nonforfeiture Law for Life Insurance, Section 5c(B), nonforfeiture net level premium defined

  “The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the...”

• NAIC Standard Nonforfeiture Law for Life Insurance, Section 4, computation of paid-up nonforfeiture benefits

  “Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of the anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is...”

• NAIC Standard Nonforfeiture Law for Life Insurance, Section 2D, cash surrender value for paid-up and continued policies

  “That if the policy shall have become paid-up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of...”

• NAIC Standard Nonforfeiture Law for Life Insurance § 2A (paid-up benefit granted effective as of the due date)

  “That, in the event of default in any premium payment, the company will grant, upon proper request not later than sixty (60) days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of the due date, of such amount as may be hereinafter specified.”

• NAIC Standard Nonforfeiture Law for Life Insurance § 7 (proration of values between policy anniversaries)

  “Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the...”

• NAIC Standard Nonforfeiture Law for Life Insurance § 2 (deferral of cash surrender value payment)

  “The company shall reserve the right to defer the payment of any cash surrender value for a period of six (6) months after demand therefor with surrender of the policy.”

• NAIC Standard Nonforfeiture Law for Life Insurance § 2F (required statements; effect of indebtedness)

  “A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation of the manner in which the cash...”

• Standard Nonforfeiture Law for Life Insurance, Section 5C

  “The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to: (1) The adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums...”

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