What is Automatic Non-Forfeiture Options?

If the policy has acquired a surrender value and a premium has remained unpaid beyond the grace period, the policyholder will entitled to benefits under one of the following two options given hereinafter, depending on the option exercised (if any) in his Proposal for this policy:
Option A : Automatic Paid-up
Option B : Automatic Premium Loan
Provided the surrender value of the policy exceeds the total of due premiums(s) remaining unpaid and any other amount owed to State Life. The option can be exercised at the time of taking the policy or at any time thereafter while the policy is in force. The option can be changed subsequently by written intimation to and endorsement in the policy by State Life, so long as no premiums remain unpaid beyond the grace period. If no option has been exercised by the policyholder, benefits under "automatic paid-up" option will apply.
A – Automatic paid-up Option
This policy will be converted into a paid-up policy. The paid-up Sum Insured will be specially calculated to allow for the clearance of all outstanding dues of State Life against the policy. No further premium(s) will be payable but the sum insured will be reduced. Any bonuses attached to the policy will be taken into consideration while determining the paid-up sum insured. A policy once paid-up will not be entitled to any further bonuses. If the specially calculated paid-up sum insured works out to be less than Rs.100/ the policy will not be converted into paid-up but will be treated as having been forfeited losing all its benefits. A policy thus made paid-up may be revived for full sum insured as per provision of condition No-4 above.
B – Automatic Premium Loan Option
So long as the net surrender value of the policy equals or exceeds any due premium remaining unpaid beyond its grace period, State Life will continue to keep this policy in full force, and treat the said premium as paid by creating an automatic premium loan against the net surrender value of the policy. When the net surrender value of the policy becomes less than a due premium remaining unpaid beyond its grace period, the policy will be kept in full force for a further broken period. This broken period will bear the same proportion to the full period of the unpaid premium as the net surrender value bears to the unpaid premium. The policy; will automatically be forfeited and lose all benefits at the expiry of the said broken period. Profit or return (however called or described) will be charged on automatic premium loan at rates determined by State Life from time to time, so long as any automatic premium loan along with profit or return (However called or described) is outstanding against this policy, any; payment received by State Life will first be applied to reduce this debt
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