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Tuesday, January 30, 2018

What is Paid up Insurance Policy?

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A paid-up policy is one that requires no further premium payments and continues to provide benefits till maturity. 

A policy can be converted to a paid-up policy once it acquires a surrender value which is typically after 2-3 annual premiums are paid for traditional plans. For Ulips, there is a lock-in period of 5 years. 

Paid-up value is usually calculated as number of paid premiums X sum assured /total number of premiums. 

In case of a paid-up Ulip, the policy administration charges, mortality and fund management charges continue to be applicable and negatively impact the fund value. 

This is a useful option when one is stuck with an inappropriate product due to wrong selection and can be opted for instead of surrendering the policy to avail of a life cover. 



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