Life Insurance- What does paid up life insurance mean?
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5 Responses
2.1.2010
Best Answer – Chosen by Voters If you take it literally, it means the life insurance is paid up and you don't have to pay any more premiums.But the insurance industry tend to twist the definitions. For example, a dividend is suppose to mean a company has made profits and share those profits to its shareholders as a dividend. But in life insurance, a dividend really means that you have overpaid your premiums and the insurance company refund the excess amount to you.So, the term "paid up" in life insurance really mean that you have built enough cash value where you don't have to pay your premiums for awhile. The catch is, your life insurance is still enforced and someone has to pay the annual premiums. So the insurance company takes money from your cash value to pay for it. If you die someday, your family will get the death benefit MINUS whatever cash value was taken (including the interest charged on the cash value). When your cash value is near depletion, you will get a letter that your life insurance policy is in endangered of being lapse. If you do not pay the premiums, you will lose coverage. Source(s): Life insurance expert and analysis.Educate yourself about life insurance here: http://finance1o1.blogspot.com
2.1.2010
The basic definition of Paid-Up Insurance for life insurance means that all the premiums have already been paid, with no further premium payment due.However, in this case, it sounds like you have a certain amount of life insurance coverage that is fully paid-up, perhaps a permanent life insurance policy.You may be paying additional premiums for a portion of your life insurance that is term lfie insurance, that is not paid up.ROP Life Insurance means return of premium life insurance. This coverage is usually purchased as term life insurance. If you outlive the term or period of the life insurance coverage, you get the premiums back.You may want to check your life insurance policy and the terms and definitions listed in the back of the policy.Or, you could contact your life insurance agent and ask for an explanation, or write the insurance company and ask for the meaning of paid up life insurance as it relates to your policy – ask for it in writing for your file.I hope that helps! Best of luck to you. Source(s): 18 years experience in the Insurance Industry.Source: http://www.term-life-online.com
2.1.2010
When a life insurance policy requires no future premium payments but still provides coverage, it is called paid-up life insurance or a paid-up policy. Paid-up insurance is a non-forfeiture option in many life insurance policies, meaning that there is a reduced amount of the death benefit that your beneficiary can receive from the policy even if you stop making premium payments. Source(s): 35 years of experience in the insurance industry
2.1.2010
It means that you have some form of a whole life (vs. term) insurance policy. Google "whole life insurance."
2.1.2010
Some policies increase the coverage the longer you make the payments. At this point, my wife's policy increases more each year than the payments we make. They are giving her credit (interest) on the principle. We could stop paying and the coverage would stay in effect but would stop growing.