What are paid-up additions in Whole Life Insurance?

Paid-up additions are small, fully paid portions of life insurance that increase both the death benefit and the cash value of your Whole Life Insurance Policy. Consider this: You’re much like Tim, a Canadian LIC client who wanted his policy to grow but was concerned about his budget. Using his dividends to buy paid-up additions effectively increased Tom’s coverage without raising his ongoing Whole Life Insurance Premiums.

Good question! The dividends that accrue on the existing Whole Life Insurance Policy can be used to buy additional paid-up insurance, which means there is nothing you have to pay extra from your pocket. Maria was a client at Canadian LIC and found this method to be perfect. It fits quite well with her goal of increasing coverage without straining her budget by paying high premiums monthly for the whole life policy.

Absolutely! These paid-up additions to your Whole Life Insurance Policies add to your cash value, which grows over some time and is available if you need to borrow. For example, David from Canada utilized the cash value of his paid-up additions to fund a down payment on a new home.

For a quote about Whole Life Insurance with paid-up additions, contact Canadian LIC. We will provide you with a custom quote showing how the addition of paid-up additions is going to enrich your policy. When Leema contacted us for a quote, she was pleasantly surprised to learn how very affordable it can be to add paid-up additions as part of her financial planning.

While paid-up additions offer many benefits, some might have better choices. It all depends on your financial goals and where you are in the process. Jammy, one of our clients with Canadian LIC consultation, felt it was more suitable for his short-term financial needs to focus his dollars on his current Whole Life Insurance Premiums. We invite you to consult with a Canadian LIC advisor to determine whether this is the right option for your personal financial strategy.

If you opt to surrender the whole of your life insurance policy, then the cash value of paid-up additions is added to the surrender value. This had been an important consideration for Samantha, who had an urgent need for liquidity, which she discovered was substantially enhanced by the cash she had accumulated through her paid-up additions, thus enabling her to receive the much-needed funds at the time.

Yes, you can start the paid-up additions at any time, provided your policy allows for it and you are receiving dividends. Robert started his policy without a paid-up addition. He decided to bring in the paid-up addition after five years, which added more value to the policy as his financial situation improved.

Paid-up additions are purchased using dividends from your Whole Life Insurance Policy, which means that no additional premiums are required. This was a game-changer for Anita, a Canadian LIC client who had been concerned at first by the cost earlier. She felt relieved by the fact that she could increase her coverage without changing her monthly budget committed to Whole Life Insurance Premiums.

Before opting to have paid-up additions, first consider your long-term financial goals and current financial condition. Neil is among the experienced Canadian LIC advisors who consistently share stories like his client Ben, who considered the possible income he would earn in the future and his retirement plans as a way of deciding whether investing in paid-up addition was the right thing to do. It’s vital to discuss it with a professional so that this feature will be tailored based on your needs.

You can buy paid-up additions as often as you receive dividends from your Whole Life Insurance Policy, which is usually annually. Chloe, one of our clients, annually reviews how her policy is performing and whether or not to reinvest her dividends in paid-up additions. This helps to keep the growth of her Whole Life Insurance Policy aligned with her changing financial priorities.

Paid-up additions to one’s current policy may not directly impact the quotes one can receive for a second policy. However, the ability to showcase an up-to-date and financially healthy current policy can sometimes lend a positive flavour to views concerning your financial stability. In Kevin’s case, advisors from Canadian LIC were using his well-managed first policy as an example of his excellent financial acumen, which helped him attract better terms for the second policy.

Growth in cash values in the form of paid-up additions through a Whole Life Insurance Policy is generally tax-deferred under Canadian law. Thus, different situations may mean different things, especially if you are withdrawing from or borrowing against such a policy. Canadian LIC helped a client, Susan, understand these implications to ensure she makes the most of her policy without unexpected tax repercussions.

Annual statements are sent out by Canadian LIC, detailing how your Whole Life Insurance Policy is performing. This allows clients like Omar—a careful watcher of his investments—to know exactly how his decisions shape the growth and security of his policy.

Once added, paid-up insurance additions normally cannot be removed as single items from a policy since they become part and parcel of your Whole Life Insurance coverage. This was important for her to know since Saba initially thought that she could opt in and out of a savings account. Advisors from the Canadian LIC ensure that their clients understand that such features are long-term enhancements to their policies.