Paid Up Policy
A planning technique that eliminates premium payment obligations in exchange for a decreased death benefit.
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Solution Snapshot
Advisor Team Synergy
Replace survivor life policies with coverage that does not require premiums so the family can utilize their exemption to gift other, more highly appreciable assets.
Solution Snapshot
Estate Plan Audit
Death benefit recipient changed to the children for all the policies, so policy was exchanged to a survivor life policy with no future premiums and a loan payoff of approximately $700K on existing policies to end the ongoing interest payments.
Solution Snapshot
Updating a Portfolio
Replace existing individually-owned premium-paying policies with new policies that have a zero-premium outlay, an increased death benefit, and a longer duration. Use the premium savings to purchase a survivor life policy.
Candidates
Solutions are not one size fits all. For every planning technique, there are determining factors that illustrate whether the technique will fit the planning for an individual, family, business, or non-profit organization. Outlined below are ideal candidates who might benefit from exploring Paid Up Policy solutions.
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The cash value inside some permanent policies can be used to offset the premium payments in exchange for a permanently reduced death benefit, which is referred to as a paid-up policy. This option is for permanent policies and works best when there is substantial cash value inside the policy. Alternatively, a policy’s cash value can be exchanged for a new paid-up policy at another insurance carrier. This approach would require underwriting, and you would need to be in good health. In either scenario, no further premium payments would be required, and the reduced death benefit would be paid to the policy’s beneficiary at your mortality.