Reduced Paid-Up Option: Preserving Permanent Coverage Without Premiums

The **Reduced Paid-Up (RPU)** option is one of the non-forfeiture options available to Whole Life policyholders who decide they can no longer afford the premiums but want to maintain permanent coverage. It is a critical safety valve for preserving the asset’s value.

How RPU Works

When the policyholder selects the RPU option, the insurance company takes the entire accumulated Cash Surrender Value (CSV) of the existing policy and uses it as a single, one-time premium to purchase a new, fully paid-up Whole Life policy. Key outcomes:

• **No Further Premiums:** The policyholder never has to pay another premium.
• **Reduced Death Benefit:** The new policy will have a smaller death benefit than the original policy, determined by the amount of the CSV used.
• **Permanent Coverage Maintained:** The new, reduced death benefit is guaranteed to be paid at death.

This is often a better choice than surrendering the policy, as it retains the benefit of permanent, tax-free death protection.

Disclaimer: This content is for informational purposes only and is not financial or legal advice. RPU is a permanent election; ensure you understand the exact reduced death benefit amount before choosing this option.