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What Is Paid Up Additions In Life Insurance?

Paid-up life insurance is a state or condition where your coverage is fully funded and you do not need to make any additional premium payments to maintain the policy. It is usually available only on whole life policies. There are several ways to fully fund your policy, and each operates very differently. Let’s take a moment to explore three options:

Paid-up AdditionsReduced Paid-up InsuranceCash Value
Increases in coverage that you can purchase using dividends generated by a whole life policy.Use your available cash value to purchase a reduced whole life policy that offers significantly less protection than was originally purchased but that is paid up in full.Grows at a guaranteed rate and can be used to purchase paid-up additions.

Cash value and non-guaranteed dividends are extremely important because they can help policy owners purchase paid-up additions. A New York Life financial professional will be able to take all the factors into consideration and give you an illustration of how your policy operates. You will receive an annual statement that shows how much cash value you have accumulated to date. You can also contact your New York Life financial professional any time for assistance.

While it’s generally not a sound financial strategy, it is possible to cash out any policy that earns cash value. However, you may incur surrender charges and will only receive the net cash surrender value that is currently available on the policy, which is likely to be significantly lower than the original face amount (death benefit) of the policy.

If you have additional questions about paid-up insurance, or whole life in general, please contact your New York Life financial professional. That way, you’ll be sure to receive the information and guidance you need to make an educated decision.

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