What are reduced paid-up and extended term options on a life insurance policy?

Reduced paid-up and extended term are non-forfeiture options available on permanent life insurance policies when you can no longer afford or wish to continue paying premiums. Both options use the accumulated cash value to provide continued coverage without future premium requirements.

With reduced paid-up insurance, the policy continues as a paid-up whole life policy with a reduced death benefit—calculated based on your current cash value as a single premium for permanent coverage at your current age. You receive smaller but lifelong coverage with continued cash value growth and no further premium obligations.

With extended term insurance, the full original death benefit continues for a limited period—calculated based on how long the current cash value could sustain term coverage at your current age. Coverage eventually expires, but you maintain the full benefit amount during the extension period.

Which option is better depends on your situation. Reduced paid-up provides permanent (lifelong) coverage, albeit at a lower amount—better for long-term legacy planning. Extended term maintains full coverage temporarily—better if you expect temporary financial hardship and plan to resume premiums.

If not selected by the policyholder, Nevada law requires carriers to apply the default non-forfeiture option specified in the policy. Agents in our network can help you understand which option best serves your needs if premium affordability becomes a concern.