Many whole life policies will have lapse protection options, one of which is reduced paid up. When premiums aren't paid and a whole life policy lapses with a reduced paid up option, the cash value of the policy is used to purchase as much paid up life insurance as the value will provide for. The amount of coverage will invariably be less than the original face amount of the policy (or "reduced") and no further premiums will be due ("paid up").
Another option alternative to reduced Paid Up is Extended Term. In this option, the cash value buys a term policy with an equal face amount to the original policy. However, the length of time the policy will be in force (the term) is determined by the amount of cash value in the policy.
Reduced Paid-up Insurance - A form of insurance available as a non-forfeiture option, providing for continuation of the original insurance plan at a reduced amount.
June 3rd, 2008 at 7:07 am
Many whole life policies will have lapse protection options, one of which is reduced paid up. When premiums aren't paid and a whole life policy lapses with a reduced paid up option, the cash value of the policy is used to purchase as much paid up life insurance as the value will provide for. The amount of coverage will invariably be less than the original face amount of the policy (or "reduced") and no further premiums will be due ("paid up").
Another option alternative to reduced Paid Up is Extended Term. In this option, the cash value buys a term policy with an equal face amount to the original policy. However, the length of time the policy will be in force (the term) is determined by the amount of cash value in the policy.
June 3rd, 2008 at 7:07 am
Reduced Paid-up Insurance - A form of insurance available as a non-forfeiture option, providing for continuation of the original insurance plan at a reduced amount.