Reduced Paid-Up Insurance

Reduced paid-up (RPU) insurance is a non-forfeiture option available when a policyholder stops paying premiums on a permanent life insurance policy. The accumulated cash value is used as a single premium to purchase a smaller, fully paid-up permanent policy of the same type as the original — requiring no future premium payments. The death benefit is reduced, but coverage remains in force for the insured's lifetime. Cash value continues to accumulate in the reduced paid-up policy, and — for participating policies — non-guaranteed dividends may continue to be earned. RPU is one of the most common elections when policyholders can no longer afford premiums but want to retain some permanent coverage.