Glossary
Paid-up value
Paid-up value is the reduced sum assured a life policy continues to provide when the policyholder stops paying premiums but keeps the policy in force.
Paid-up value explained
Instead of surrendering a policy with a savings element, a policyholder can sometimes make it paid-up. Premiums stop, but the policy stays alive with a smaller sum assured based on the premiums already paid. For example, a K100,000 endowment made paid-up after a third of its term might continue with a sum assured of roughly a third of that amount, depending on the policy's terms.
Paid-up value is only available on products that build cash value, and usually only after a minimum number of premiums have been paid. The policy conditions set out how it is calculated.
Why it matters in life insurance
Offering a paid-up option gives policyholders under financial strain an alternative to losing their cover entirely, which supports persistency and customer trust. Ontech LifeI ERP calculates paid-up values from product rules and records the change as an endorsement on the policy.