What is paid-up life insurance?
Paid-up life insurance isn’t necessarily its own form of whole life insurance coverage, but rather a condition of an existing whole life insurance policy.1
In other words, paid-up whole life insurance exists as part of an existing whole life insurance policy. Achieving paid-up whole life insurance status can be done in one of two ways:
Paid-up life insurance isn’t necessarily its own form of whole life insurance coverage, but rather a condition of an existing whole life insurance policy.
- Converting your whole life insurance policy to a paid-up policy by satisfying all of the premium payments necessary to achieve paid-up whole life insurance status.1
- Ceasing premium payments before the end of the premium paying period to make the policy paid-up, but with a lower death benefit.1 This is called triggering the ‘reduce paid-up’ feature of your whole life insurance policy.1
Generally speaking, a paid-up whole life insurance policy allows those with paid-up status to increase their death and living benefit by adding to the policy’s cash value – but how does that work?
How paid-up whole life insurance works
To achieve paid-up status with your whole life insurance policy, you will have to make a number of premium payments.1 The number and amount of these payments are usually outlined in the policy’s premium payment period, which clearly identifies the number of premiums and/or amount of premium needed to satisfy the paid-up feature of your whole life insurance policy.1 Meeting these requirements will typically allow you to qualify for paid-up whole life insurance. However, if paid-up whole life insurance isn’t structured into your whole life insurance policy from date of purchase, you may not be able to add it later.
Should you have paid-up whole life insurance, you may be able to increase cash value over time.1 You can then use the cash value you’ve accumulated to increase the death benefit and living benefit of the policy, a particularly useful feature for those looking for some flexibility when it comes to thier finances.1
Generally speaking, paid-up whole life insurance allows you to contribute as much (or as little) as you want to your policy from year to year so long as the outlined number of premium payments are met according to your policy contact.1 However, some companies may require your contributions be at the same level. For this reason, it’s important to review your whole life insurance policy for more details.
For more information on paid-up whole life insurance, we suggest speaking to a licensed insurance professional or financial advisor.