Paid-up insurance policy: 5 things to know

1.A paid-up policy is one where the policyholder stops paying regular premiums, but continues to enjoy partial insurance coverage.

2.When a plan is converted into a paid-up policy, there is no further obligation to pay regular premiums and can be a big financial relief in difficult times.

3.The policyholder or beneficiaries do not receive the policy’s original coverage, and it is reduced to the extent of the premium payment that has been made.


4.Some insurance providers levy surrender charges or penalties to shift to paid-up policy.

5.The paid-up feature also helps avoid lapsation of policies when it’s difficult to pay the premium.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.