YOU ASK:

What is the definition of Reduced Paid-Up Insurance Option?

WE ANSWER:

The Reduced Paid-Up Insurance Option is one of the nonforfeiture options available in life insurance policies and it enables the policyowner to use the cash value of the policy to buy insurance coverage that is all paid up.

This enables the policyowner to stop paying premiums but still be covered. However, the value of the coverage is limited by just how much the cash value could buy, so the insured person will remain covered, but only for lower face amount.

The insurance company will recompute for the premiums and provide the policyowner with the same plan as the original policy.

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