Define: "Paid-Up Insurance"
An insurance policy that does not require future premium payments to provide the death benefit of the insured person. A form of insurance available as a non-forfeiture option, providing for continuation of the original insurance plan at a reduced amount.
STEP 1: Contact the customer service department at the home office and ask the representative to calculate a reduced paid-up insurance policy based on current policy values. STEP 2: Factor the lower death benefit of such a policy into your retirement and estate planning. STEP 3: Fill out the necessary forms to allow the company to issue you a new permanent policy. STEP 4: Exercise the paid-up term Option if available. Determine if your policy provides a paid-up term option, and calculate how long the term coverage will actually last. STEP 5: Choose this option if your insurance needs do not exceed the period of extended term coverage.
More Examples of Paid-Up Insurance:
More than 60% of elective surgery procedures in the United States are currently performed as "outpatient surgeries." Health experts expect this percentage will increase to nearly 75% over the next decade.
Reduced paid-up policy option may be one of the guaranteed benefits of your whole life or universal life policy.
Choosing this option provides a lower guaranteed lifetime death benefit to your beneficiary and eliminates the need for further premium payments. A paid-up term policy allows you to stop making premium payments, yet still provides a death benefit to your beneficiary. Reduced paid-up insurance policies do not have a cash value against which loans can be made. Once chosen, this change is permanent and irreversible. The death benefit of such a policy will be significantly lower than that of the original policy. This option is not available for all permanent-type life insurance policies. Loans against cash values may not allow such an option to be exercised until they are paid in whole or in part. Paid-up term policies are permanent and irrevocable and provide no cash values. Loans cannot be made on paid-up term policies. Insurance coverage terminates at the end of the term and cannot be renewed or extended.
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