What Does A Paid Up Life Insurance Policy Mean? 
Paid up life-insurance means you dont make anymore payments on the policy . You still get the coverage , but you no longer have to pay for it . But heres the question : suppose you wanted to keep paying ? Why wouldnt the insurance company allow you to do so ? I mean , some of these permanent insurance policies can get very cash rich . Whole life policies can pay some pretty hefty dividends . Universal life policies can apply a pretty decent interest rate . As I am sure you have heard , there can be some great tax advantages to accumulating wealth inside life insurance : tax-deferred accumulation , and , under the right circumstances , tax-free distributions . So why wouldnt an insurance company just let you go for it ? A number of decades ago , they did . People were taking out policies with face amounts of $ 50,000 or $ 100,000 , but putting huge amounts of cash into them . Huge amounts . They really milked the tax advantages of the product . Of course , the IRS got wise to this and imposed certain rules . These rules limit the amount of money that can grow inside these policies and still avoid taxation . You can exceed this limit , but then you get a tax bill . From this point of view , paid up means if you put more cash into the policy , you could create a taxable event . It also means something else , in consideration of the expenses of the policy . Lets say you take out a universal life product with a guarantee to age 100 . This means that given the proper payment schedule , both the premium and the death benefit will be guaranteed to a age 100 . The emphasis is on the payment schedule . If you meet it , then no more payments would be required to secure those guarantees . It would be paid up . Whats interesting here is that , depending on the product , a lot of flexibility exists for designing a payment schedule . You can have continuous pay and simply pay the lowest amount required annually . You could have a single pay in which just one payment in the first year will get you what you want . You could have a 10 pay , which means you just pay for 10 years - and still get the guarantees . You could have 20 pay . And so on . Depending on your cash flow and other factors , you could pay up your policy with any number of strategies . And then you simply would not have to worry about paying for your life insurance , even though you would have the coverage for as long as you need . Want to keep learning ? Read my blog : planrisklive.com 