1. 145 POINTS
    Omar Sangurima
    Basically, this is the value of the policy if, for whatever reason, you stopped paying the premiums immediately and the original policy lapsed. For example, you could have a life insurance policy with a death benefit of $100,000. It could have a paid up value of, say, $10,000. This means that if you stopped paying the premiums for a long enough period, the policy would then become a paid-up policy in the amount of $10,000: You would no longer have to pay premiums on it, but it would then only pay out $10,000 in the event of the insured's death.
    Answered on May 7, 2013
  2. 220 POINTS
    Stephen Rogers
    Self-employed Employee Benefits Provider, Upland, California
    Paid up value in life insurance is a non-forfeiture provision which is found in most classic whole life insurance policies.

    Non-forfeiture provisions are a series of values found within a life policy that give you options if you want to stop making premium payments on your policy.  These options are:

    Cash Surrender: Giving up or selling your policy back to the insurance company for the amount of cash value accumulated within your policy over the years you own it.  These values are stated on a chart called Non-forfeiture Provisions contained within your policy.

    Extended Term Insurance:  This provides for the continuation of the full face amount of your policy for a specified period of time based on the amount of cash value accumulated within your policy.  The length of time is stated in the same chart listed as non-forfeiture provisions.

    Paid-up Insurance Value:  This provision also is included the the chart of Non-forfeiture provisions and it lists the new face amount of insurance you can elect if you stop making premium payments for the policy.  It is based on the cash surrender value of the policy at the time you stop making premium payments.  Depending on the length of time the policy is in force this amount may equal the full face amount of the policy, and this amount will be in force for the rest of your life.

    There are policies that can be purchased with a date where the policy is fully paid up, such as a 20 year payment life, or a life paid up at age 65.  Generally these policies spread a lifetime of premium payments over a shorter period of time making the premium payments slightly more than a traditional whole life policy where premium payments are paid for the life of the insured, and are typically known as a limited payment life policy.
    Answered on May 7, 2013
  3. 12689 POINTS
    Ted RatliffPRO
    Owner, SFS Associates,
    A life insurance policy that has cash value has several non forfeiture options.  Should you no longer be able to make the premium payments you may choose to do one of three things.  You can use the cash value to purchase a paid up policy.  This means you have a reduced face amount for whatever the cash value will buy.  You must notify the company if you want this option.  If you do nothing and simply stop paying, the policy will go on what is called extended term.  The cash value will purchase low cost one year term for the full face amount until the cash value is used up.  There are tables in your policy that show this.  You could also cash surrender the policy for the cash value.
    Answered on May 7, 2013
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