What Is Paid-Up Policy? Definition

Why it matters

A policy can become paid-up through a limited-pay design, such as pay for 10 or 20 years, or through dividends or reduced paid-up conversion. The death benefit stays in force, and cash value may keep growing. This is helpful for seniors on a fixed income. Terms differ by carrier and plan.

Source: naic.org

Where we use this term

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Related terms

Reduced Paid-Up: Reduced paid-up is a nonforfeiture option that uses a policy's cash value to buy a smaller, fully paid permanent policy. No more premiums are due.
Whole Life Insurance: Whole life insurance is permanent coverage that lasts for the insured's entire life as long as premiums are paid. It combines a guaranteed death benefit with a cash value that grows at a rate set by the insurer.
Nonforfeiture Options: Nonforfeiture options are choices a permanent policy owner has if premiums stop. They let the owner keep some value, such as cash, reduced paid-up coverage, or extended term coverage.
Premium: A premium is the amount you pay to keep an insurance policy active. You can pay it monthly, quarterly, semiannually, or annually, depending on the carrier.
Cash Value: Cash value is the savings part of a permanent life insurance policy. It grows over time at a rate set by the policy and can be borrowed against or withdrawn, subject to the contract terms.

All 241 terms

Why it matters

Where we use this term

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