How Do Paid-Up Additions Increase Life Insurance?
Plain-English definition: Additional permanent insurance purchased with a dividend or other value, subject to the policy's rules.
Small blocks of permanent insurance with no new premium
A paid-up addition is a small block of permanent insurance purchased without ongoing premiums for that block. It can increase cash value and death benefit under the contract.
Purchasing additions with a declared dividend
Turning a dividend into additional coverage
A participating whole life owner directs annual dividends to paid-up additions. The actual amount purchased depends on the declared dividend and purchase rates at that time.
Paid-up additions are not reduced paid-up insurance
A paid-up addition is additional insurance. Reduced paid-up insurance is a nonforfeiture choice that changes the base policy after premiums stop.
Separate existing additions from projections
- Confirm the source used to buy additions
- Separate guaranteed existing additions from projected future purchases
- Check whether additions can be surrendered
Connect additions with whole life dividends
Use paid-up additions in life insurance to see how this definition affects a real policy decision.
Terms to read alongside paid-up addition
Sources for understanding paid-up addition
This page explains general insurance usage. State law, the issued contract and the insurer's current records control a specific policy. Use the sources below to verify general terminology, then check the exact policy language.