What Are Paid Up Additions Life Insurance Policy?
Wait…Whole Life Insurance Policies Pay Dividends?
Some of them do, yes! You’ve probably heard of stocks that pay dividends. These life insurance policies operate the same way. They’re often offered by mutual companies, which are owned by the policyholders. (You can tell which insurers these are because they usually have “mutual” in the name, like Mutual of Omaha, MassMutual, and Penn Mutual.)
These are always whole life policies – specifically, a type called “participating whole life.” The “participating” means that you, as the policy owner, participate in the company’s profits by receiving dividends. The amount of dividends you get depends on three things:
How well the insurer’s investments do
How large a death benefit your policy has
How much cash value your policy has accrued
The more invested you are in the company (i.e., the more cash value and death benefit coverage you have), the higher your dividend will be. You can choose to use those dividends to buy paid up additions, giving you more coverage without paying a dime.
Rather talk to a real person about life insurance? We get it – it’s confusing! That’s why we’re here to help. Call us at (800) 521-7873 and we’ll answer all your questions so you can make an educated decision.
