Paid-Up Additions (PUA)

Paid-up additions (PUAs) are small, fully paid-up whole life insurance policies purchased with dividends or additional premium payments, adding to the policy's death benefit and cash value without generating new cost-of-insurance charges on a separate basis. Each PUA itself generates future dividends, creating a compounding effect. PUAs are the most efficient use of dividends within a whole life policy and are a key mechanism in overfunded whole life strategies (sometimes called "Infinite Banking"). The ability to elect PUAs with dividends is a standard provision of participating whole life policies; additional PUA riders allow policyholders to directly purchase more paid-up additions beyond dividends alone.