Glossary

Paid-up policy

A permanent life policy that needs no more premiums yet stays in force for life, because past premiums or its cash value have fully funded it.

Also called: paid-up insurance, fully paid-up policy

A paid-up policy is permanent life insurance on which no further premiums are due; coverage continues until death without more payments. A policy becomes paid up in one of three main ways. Limited-pay whole life is designed to be fully paid after a set number of years or at a set age, such as 10-pay, 20-pay or paid-up at 65. A single-premium policy is paid up from day one. And an owner who stops paying a policy with cash value can use that value to buy reduced paid-up insurance with a smaller death benefit.

Say, hypothetically, a 45-year-old owns a $200,000 whole life policy with $60,000 of cash value and stops paying. Based on the policy's nonforfeiture table, the insurer might offer about $110,000 of paid-up coverage for life with no more premiums. The reduced policy keeps building cash value and, if participating, may still earn dividends.

Don't confuse paid up with premium offset, where dividends are used to cover premiums. A policy in premium offset isn't truly paid up: if dividends fall, premiums can resume. Check the guaranteed paid-up date in the contract. See limited-pay whole life: 10-pay, 20-pay and paid-up at 65, nonforfeiture options: reduced paid-up and extended term and paid-up additions riders explained.

Last reviewed October 4, 2026

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Related terms

Reduced paid-up insurance A nonforfeiture option that uses a policy's cash value to buy a smaller, fully paid permanent policy so no more premiums are due. Whole life insurance Permanent life insurance with fixed premiums, a guaranteed death benefit and guaranteed cash value growth, sometimes boosted by dividends. Cash value The savings component that builds inside whole life, universal life and other permanent policies, which the owner can borrow against or withdraw. Policy dividend A non-guaranteed annual payment a participating whole life policy may receive when the insurer's mortality, investment and expense results beat its assumptions. Extended term insurance A nonforfeiture option that uses a lapsed policy's cash surrender value to buy term coverage for the full face amount for as long as the money lasts.

Related guides

How whole life insurance works Whole life pays a death benefit whenever you die, charges a level premium and builds guaranteed cash value. How the pieces fit and where it falls short. Infinite banking with whole life: how it works and the catch How the infinite banking concept uses an overfunded whole life policy and policy loans, what supporters claim, and the costs, limits and risks critics raise. Life insurance after 80 New life insurance after 80 is limited to guaranteed issue and some simplified policies. What exists, what it costs, and what to do with policies you own. Limited-pay whole life: 10-pay, 20-pay and paid-up at 65 Limited-pay whole life compresses premiums into 10 or 20 years, or to age 65, then stays in force for life. How it works, what it costs and when it fits. Nonforfeiture options: reduced paid-up and extended term What you can do with a permanent policy's cash value if you stop paying premiums: take cash, buy reduced paid-up insurance or extended term, and how each works. Paid-up additions riders explained How paid-up additions and the PUA rider work in whole life, what extra premium buys, the cost trade-offs, and the MEC limit that caps how much you can add.

Related insurers

Southern Farm Bureau Life Jackson, Mississippi life insurer owned by 10 state Farm Bureaus, selling term, participating whole life and annuities via Farm Bureau agents in 11 states.