{"id":14162,"date":"2026-05-27T07:38:45","date_gmt":"2026-05-27T07:38:45","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/paid-up-value\/"},"modified":"2026-05-27T07:38:45","modified_gmt":"2026-05-27T07:38:45","slug":"paid-up-value","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/paid-up-value\/","title":{"rendered":"Paid-Up Value"},"content":{"rendered":"

Paid-up value<\/a> is the reduced sum assured<\/a> that a life insurance<\/a> policy continues to provide after you stop paying premium<\/a>s, without surrendering the policy. Instead of letting the policy lapse when you cannot afford premiums, you convert it to a paid-up policy. The insurance cover continues at a lower level for the rest of the policy term, but you make no further premium payments.<\/p>\n

What Is Paid-Up Value?<\/h2>\n

When you stop paying premiums on a savings-linked life insurance policy (like an endowment or money back plan) after a minimum period (usually 2 to 3 years), the policy does not automatically lapse. Instead, it becomes a paid-up policy with a reduced sum assured called the paid-up value.<\/p>\n

The paid-up sum assured is proportional to the number of premiums paid versus the total number of premiums due under the policy.<\/p>\n

Paid-Up Value Formula<\/h2>\n

Paid-up value = (Number of premiums paid \/ Total number of premiums) x Original sum assured<\/p>\n

**Example:**
\nSum assured: Rs 10 lakh
\nPolicy tenure: 20 years (annual premiums)
\nPremiums paid: 8 years
\nPaid-up value = (8\/20) x Rs 10 lakh = Rs 4 lakh<\/p>\n

The policy now provides Rs 4 lakh as a death benefit or maturity benefit without any further premium obligations.<\/p>\n

When Can a Policy Become Paid-Up?<\/h2>\n

A policy acquires paid-up status only after a minimum number of premiums have been paid, typically 2 to 3 years. If you stop premiums in the first year, the policy lapses with no value.<\/p>\n

Paid-Up vs Surrender<\/h2>\n

| Feature | Paid-Up | Surrender |
\n|———|———|———–|
\n| Policy status | Continues at reduced cover | Terminated |
\n| Coverage | Reduced but active | None |
\n| Cash received | No (until maturity or death) | Yes (immediately) |
\n| Better for | Those who need future coverage | Those who need immediate cash |<\/p>\n

Bonuses on Paid-Up Policy<\/h2>\n

Once a policy becomes paid-up, further reversi<\/a>onary bonuses stop accruing. However, bonuses already declared up to the date the policy became paid-up are attached to the paid-up value and paid at maturity or death.<\/p>\n

Practical Example<\/h2>\n

Sita took a 20-year endowment plan<\/a> in 2010 with a sum assured of Rs 8 lakh and annual premium of Rs 45,000. In 2020, after paying for 10 years, she faces a financial crunch and cannot continue premiums. Instead of surrendering, she converts to a paid-up policy. Her paid-up sum assured becomes Rs 4 lakh (10\/20 x Rs 8 lakh). The policy remains active, and she receives Rs 4 lakh plus accrued bonuses at maturity in 2030.<\/p>\n

Key Takeaways<\/h2>\n

– Paid-up value is the reduced sum assured you get when you stop premium payments after the minimum period
\n– The policy continues to provide coverage at the reduced level without any further payments
\n– Paid-up value is proportional to the premiums already paid versus total premiums due
\n– No new bonuses accrue after the policy becomes paid-up, but previously declared bonuses are retained
\n– Converting to paid-up is better than surrendering when you still need the coverage but cannot afford premiums<\/p>\n","protected":false},"excerpt":{"rendered":"

Paid-up value is the reduced sum assured that a life insurance policy continues to provide after you stop paying premiums, without surrendering the policy. Instead of letting the policy lapse when you cannot afford premiums, you convert it to a paid-up policy. The insurance cover continues at a lower level for the rest of the […]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-14162","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"Paid-up value is the reduced sum assured that a life insurance policy continues to provide after you stop paying premiums, without surrendering the policy. Instead of letting the policy lapse when you cannot afford premiums, you convert it to a paid-up policy. The insurance cover continues at a lower level for the rest of the…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14162\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}