If you are planning to buy life insurance, your agent likely reviewed a lot of policies with you. With so many options, it can be tough to tell which one is right for you.
If you are a newbie to insurance and you simply want coverage right now, you may be in luck. Paid-up insurance is a type of policy that is commonly thought of as a starter policy.
What Is Paid-Up Insurance?
Paid-up insurance is whole life insurance. It is permanent insurance, like other types of whole life insurance. Unlike other types of insurance, you don’t have to make payments on paid-up insurance. That's because you’ve paid for it in full. After you've paid in full, you can stop making payments and still have coverage. It’s a great option for someone who has recently received an inheritance or someone who has come into money.
How Does Paid-Up Insurance Work?
To understand how paid-up insurance works, it’s important to understand the two types of paid-for options.
Paid-up Status
Paid-up life insurance is a whole life policy that eventually reaches paid for status. With this policy, you can convert a whole life insurance policy you own to paid-up status without making any future payments. Of course, when you choose this option, you may not receive your entire death benefit.
Paid-up Additions
A paid-up additions policy is usually available when you have a whole life policy that pays dividends. With this policy, you have the option of using your dividends to buy more life insurance. If you don’t want more insurance, then you can use your dividends to help you cover your premium payments until you don't have to make payments anymore.
With both options, you don’t have to worry about making frequent payments. Nonetheless, you have life insurance.
The Benefits of Paid-Up Insurance
When it comes to paid-up insurance, there are many benefits. For example, with a paid-up policy, you are always have the coverage you need if you pay your policy in full. With a guaranteed permanent policy, your family won’t have to worry about covering your final expenses.
Another benefit paid-up insurance is you don’t have to have to make payments on the policy when you are older if you get the policy early. With incomes reducing after retirement, this eases the stress of maintaining a budget.
A paid-up life insurance policy is a great way to get the life insurance coverage you need. For people who are new to life insurance, it’s also a great way to get coverage for final expenses.
First Independent can help you get the right life insurance coverage to meet your needs. Call us at (586) 247-2220 for more information.
Also Read: Why Life Insurance is Better Than Putting Money Into a Savings Account