May I know what is a paid up option in insurance?

Hi there,

To answer your query, the "paid-up option" refers to the convertion of a policy that is currently still in-force and within the premium paying term, to a policy that is fully paid-up. That means that you do not need to pay any future premiums for the said policy.

This option can be exercised only for policies that have a cash/surrender value. After this option is exercised, the Sum assured or benefits for the policy will be adjusted. Although the policy still retains a sum assured, the surrender value of the policy will not continue to enjoy the accrual of bonuses. You will not be able to take up a policy loan as well from the policy in question.

This is not a light decision to make, and should be done with your financial advisor to discuss the possible alternative options to your current solution.

I hope i was able to address your question to your satisfaction. Have a great week ahead!​​​

Hi Anon,

I'll try to answer this question to the best of my understanding, but please forgive me if I do get it a bit off the mark.

I believe what you're referring to would be a feature that some Whole Life plans have where it's called 'Limited Pay'.

Whole Life Plans have cash value, and when you finish paying up a certain premium term, the policy continues past that time but you still keep the policy.

Let's go with a simple example:

I buy a Whole Life Plan Limited Pay 20 years.

After I paid the premiums for 20 years, it means that I'm done, and the policy continues on year 21 until year X, where X is the year I hit age 99.

This varies from company to company, but usually your Sum Insured will be reduced accordingly.

I hope that explains a bit more about Paid Up Option! Feel free to pm me on my fb page if you need better clarification.

Have a good one!