Question about Paid-Up Additional Insurance

First off, hopefully your policy includes a "Waiver of Premium" rider. This rider means if you become disabled, you no longer have to pay for your life insurance, yet the coverage continues. I will NEVER sell a life insurance policy without this rider.

Secondly, the reason you are getting that paid-up additional insurance is you are in a "participating policy". Essentially, because you are allowing the unsurance company to old your money in a cash value account, they pay you a yearly dividend.

Now, by default, this dividend is used to buy more life insurance, which increases the size of your contract, which leads to a bigger dividend, etc.

You can have those dividends used to reduce premiums in your life insurance policy.

A couple of questions, if you do not mind:

1.) Is this a whole life policy?

2.) How old are you, and when did you take out the policy?

3.) What company is the policy through?

Hope I can help,

Andrew

I think that the reason you are getting that paid-up additional insurance or form a captive is you are in a "participating policy". Essentially, because you are allowing the insurance company to old your money in a cash value account, they pay you a yearly dividend.

Andrew - I bought a $160,000 Whole Life policy in 1993 from a Met Life Representative. When I bought the policy, I understood from the calculation sheets he showed me that after about 11 or 12 years I could stop paying premiums and that the dividends on the policy would pay the premiums for the rest of my life. I contacted Met Life and they told me that I could fill out a form and stop paying in 2009 (16 years) which I did. Now here we are almost a year later and I got a form saying I have to pay a $1,700 premium which is roughly equal to the total of my monthly premiums for a year. If not they will automatically pay it out of my "additional paid up insurance" which at this rate will be exhausted in about 5 years...then what?

My opinion on life insurance... Buy Term Insurance... Invest the Difference...