The Difference Between Paid-Up Status and Policy Maturity in Whole Life

Two key terms in Whole Life insurance are “Paid-Up Status” and “Policy Maturity.” While both signal the end of premium obligations, they represent different stages in the policy’s life and have different implications for the policyholder.

Paid-Up Status (No More Premiums)

A policy is “paid-up” when the accumulated cash value and interest/dividends are sufficient to cover the future cost of insurance for the remainder of the insured’s life. This can occur in two ways:

• **Contractual Paid-Up:** The policy’s planned premium payments end (e.g., “Whole Life to Age 65”).
• **Paid-Up by Dividends:** Dividends are sufficient to cover the full annual premium.

**Crucially, the death benefit remains intact, and the cash value continues to grow.**

Policy Maturity (The Contract Ends)

Policy maturity is the final date of the contract (usually age 100, 120, or 121). When the insured reaches this age, the insurance company assumes they have died and pays out the following:

• The death benefit becomes the **cash value**, which is paid to the owner.
• This payout is generally **taxable** to the extent that it exceeds the total premiums paid.

Disclaimer: This content is for informational purposes only and is not financial or legal advice. The current trend is for policies to mature at age 120 or later to avoid the taxable maturity event.