What Is LIC Paid-Up Sum Assured?

What is the Paid-Up Sum Assured in LIC?

The Paid-Up Sum Assured in LIC refers to the coverage that remains under your life insurance policy when you stop paying premiums, provided the policy has been in force for a sufficient period. When an LIC policy becomes paid up, the policyholder has discontinued premium payments, but the policy remains active with a reduced benefit amount. This reduction is based on the premiums paid and the policy’s terms.

How is Paid-Up Sum Assured Calculated in LIC?

Calculating the Paid-Up Sum Assured in LIC involves several factors:

• Original Sum Assured: The amount initially promised by the policy to be paid out on death or maturity.

• Number of Premiums Paid: The total number of premiums paid before the policy is converted to paid-up status.

• Policy Term: The length of the policy term and how long the policy has been in force.

• Policy Type: LIC offers various policies, and the calculation method for Paid-Up Sum Assured can vary depending on the type of policy (e.g., endowment, whole life, or money-back).

For example, suppose you have a LIC policy with an original sum assured of ₹10 lakh and have paid premiums for 15 years out of a 20-year policy term. In that case, the Paid-Up Sum Assured will be a proportion of the original sum, adjusted according to the policy's paid-up value formula.

Why is Paid-Up Sum Assured Important?

• Flexibility: The Paid-Up Sum Assured provides flexibility if you can no longer afford to continue premium payments. It allows you to retain a reduced level of coverage without further financial commitment.

• Continued Protection: Even though the benefits are reduced, a paid-up policy still offers protection and can be beneficial if you need to ensure some level of insurance coverage.

• Policy Continuity: Knowing about the Paid-Up Sum Assured helps in understanding how your policy will function if you decide to stop paying premiums and ensures that you’re not caught off guard by reduced benefits.

Advantages of Paid-Up Sum Assured

• No Further Premium Payments: Once your policy becomes paid-up, you are relieved from making further premium payments while still retaining a degree of coverage.

• Reduced Benefits: Although the benefits are reduced, having a paid-up policy ensures that you still receive some payout, whether at maturity or in case of an insured event.

• Surrender Value: A paid-up policy often accumulates a surrender value, which can be beneficial if you decide to terminate the policy before maturity.

Wrapping It Up:

Understanding the Paid-Up Sum Assured is crucial for managing your LIC policy effectively. It offers a way to keep your insurance coverage active even when you can no longer afford to pay premiums, albeit with reduced benefits. To make informed decisions about your policy and understand how the Paid-Up Sum Assured affects you, it’s advisable to consult with your LIC agent or financial advisor for personalized guidance and support. This will ensure that you can navigate your insurance options wisely and secure your financial future.

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