Paid Up Calculator
Paid Up Value Calculator
Depending on your life situation, you may be finding it challenging to continue making premium payments on your insurance policy. But what happens to the sum assured if you stop making payments? Do you lose everything you have invested? If you are wondering about these questions, then the concept of policy paid-up value is essential for you to understand.
What is Paid-up Value?
If you stop making payments on your insurance policy, it lapses and you are no longer privy to any of the in-force policy benefits except life cover. But what happens to the sum assured in the policy? In a situation wherein your policy is in lapsed status, you still stand to receive the sum assured at maturity—however, this will not be the full sum assured amount, but a reduced amount called the paid-up value.
How to calculate Paid-up Value of an Insurance Policy?
The paid-up value of an insurance policy is proportional to the premium payments. It is calculated using the paid-up value formula, which is: Paid-up value = [(Number of years for which premium has been paid/Total policy term) * (Total Sum Assured)]
When does a Policy Become Paid Up?
An insurance policy is considered a paid-up policy when you stop paying the premiums after a specified period and the policy continues with a reduced sum assured known as paid-up value. Typically, policy premiums need to be paid for at least three years after the you purchase it for it to become paid-up.
How is paid-up value calculated?
The paid-up value of any policy is calculated using the paid-up value formula. The IndiaFirst Life Paid-up Value Calculator takes the guesswork out of the calculation for you. Simply enter the required details such as the policy number and your date of birth to get an automatic calculation of paid-up value based on the premium paid tenure, policy tenure and sum assured.
What is paid up value and surrender value?
If you want to stop paying the premiums on your insurance policy before the end of the policy tenure, you have the option to discontinue or surrender your policy. At this time, you stand to receive a surrender value which depends on the number of policy years completed, premiums paid, and bonuses, if any.
If premium payments are stopped after a specified period, typically 2-3 years, then the policy continues with a reduced sum assured even if you no longer make any premium payments. Such a policy is set to have reached paid up value in life insurance. Use the IndiaFirst life paid up calculator to understand the cash value of your paid-up policy.
What does it mean if a policy is paid up?
When a policy reaches paid up value in insurance, it continues to provide the policyholder benefits till maturity even though no further premium payments are made on it. A policy can continue functioning once it reaches policy paid-up value which is generally after 2-3 annual premiums are made on it. Under the paid-up value option, your policy no longer accumulates future bonuses. Calculate the paid-up value of life insurance using the IndiaFirst life paid up calculator.
Can you surrender a paid-up policy?
Yes, you can surrender an insurance policy that has reached paid-up value. If you do not surrender it, the paid-up policy continues to provide your life cover at a reduced sum assured. However, if you need the money invested in the insurance policy, you can choose to surrender the paid-up policy. In this case, a surrender value based on the number of years remaining in the policy and the amount yet to paid. To understand how much you will receive upon surrender, calculate the paid-up value of the life insurance policy with the IndiaFirst life paid up calculator.
Can you cash in a paid-up life insurance policy?
Yes, you can cash in a paid-up life insurance policy. Paid-up value indicates that your policy has received enough premium input to cover you till the policy tenure runs out even if you make no additional premium payments on the policy. You can choose to surrender such a paid-up policy and end the benefits so as to withdraw the money from the policy. Calculate the exact policy paid-up value with the help of the IndiaFirst life paid up calculator.
Does my insurance cover remain the same if I make my policy Paid-up?
In case your policy reaches paid-up value and you cease to make any future premium payments on the policy, the plan continues to function and offer you life cover till the end of the policy term. However, the sum assured associated with the policy is reduced in proportion to the premiums paid.
What about additional benefits of my policy after post paid-up?
While you can continue to enjoy the life cover benefits of a paid-up policy, keep in mind that the sum assured upon maturity will be a reduced one. Other benefits such as the accrual of annual bonuses stop if your policy has lapsed and become a paid-up policy. Calculate paid-up value with the paid-up life insurance calculator.
What are the Limitations of Paid-Up Value?
With a paid-up policy, you can choose to no longer make premium payments while still enjoying life cover. However, there are some limitations of paid-up value. The premiums on the life insurance policy need to have been made for at least 2-3 years for it to have reached paid-up value. The entirety of your premium payment does not go towards creating paid-up value. Some part of it gets directed towards expenses and commissions. This is why it takes a few years to build paid-up value. Use the IndiaFirst life paid up calculator to understand your policy’s paid-up value in life insurance.
