If a policy owner chooses the paid-up insurance option, what happens to the premiums?

When a policy owner opts for the paid-up insurance option, the premiums cease while the protection continues, albeit with reduced coverage. This option allows the policyholder to stop making premium payments after a certain point while still maintaining a form of life insurance coverage. However, since the premiums are not being paid anymore, the death benefit typically decreases based on the policy's cash value and the amount of coverage that can be afforded without further premium contributions.

This choice is set up to provide the policyholder with continued insurance protection without the financial burden of ongoing premium obligations. It is particularly useful for individuals who may want to maintain some level of coverage without the long-term commitment of periodic payments. Hence, it preserves the value of the policy for the insured while adjusting the coverage based on the accumulated cash value.