One common question an applicant asks when shopping for Arizona life insurance is whether they will be paying premiums for the rest of their life. It is a fair question. Why would someone pay mortgage insurance premiums for life if they have paid for their home? Would you continue to pay for disability income insurance once retired?
When it comes to life insurance wouldn’t it be nice to have the option of not paying monthly premiums at some point? With participating whole life insurance policies, the policyholder may do just that. Using the non-forfeiture option included in the policy they simply employ the Reduced Paid-Up (RPU) feature.
Using the cash value of the existing participating whole life insurance policy, the monies are used to purchase a paid-up lowered guaranteed death benefit. One main benefit of doing this is that monthly premiums come to an end.
In addition to monthly premiums ending the policyholder still retains all the benefits of a participating whole life insurance policy. The new paid-up policy has guaranteed cash value, and the cash value is guaranteed to grow! The policy may even earn dividend payments, and these payments may be rolled into the death benefit or cash value if the policyholder likes.
Reduced Paid-Up is not for everyone and it is not free (lowered death benefit.) It does offer flexibility though.