Paid-Up Value

When a policyholder discontinues premiums on a traditional plan that has acquired value, the policy can become paid-up: it stays in force but with a lower 'paid-up sum assured', calculated as the original sum assured multiplied by the ratio of premiums paid to premiums payable.

A paid-up policy continues to participate in any vested bonuses but stops accruing new ones, and the cover reduces accordingly. Converting to paid-up is often better than surrendering, because the policyholder keeps some life cover and the maturity value without paying further premiums. The policy can usually be revived later within the allowed window.