If the day comes when you feel you cannot keep paying the premium but don't want to give up the cover you have built, paid-up value is one of the options most policies provide. Here is how it works.
What paid-up value is
It means asking to stop paying premiums and converting the value accumulated in the policy into fully paid cover. The policy remains in force to the end of the original contract, but the sum insured is reduced according to the value available. The exact figure can be found in the policy value table.
Which situations it suits
This option is usually considered when income changes — a job change, higher expenses, or retiring earlier than planned — and continuing the premium becomes a burden. Paid-up value keeps cover with you without paying any more premiums.
What changes once you use it
- The sum insured is lower than before.
- Riders such as medical expenses or critical illness generally terminate, because they depend on continuing premiums.
- The cover period remains as under the main contract.
Each policy's actual conditions differ, so read the policy document or ask the company before exercising the option.
How it differs from surrender
Surrender means cancelling the contract and taking a lump sum, with all cover disappearing. Paid-up value means keeping cover at a reduced amount without receiving money out. If the goal is "I still want to have insurance," paid-up value usually answers better.
Before deciding
Compare the three main options when the premium is unaffordable: surrender, paid-up value, and extended term. Each produces a different result in both the amount of cover and the period. A good decision is one made while looking at the real figures for your own policy. If you are unsure, ask the agent looking after you or the company directly.