Paid-Up Additional Insurance: How It Works and Benefits
Paid-up additional insurance, often called paid-up additions or PUAs, is extra whole life coverage bought with policy dividends or extra premium payments. Each addition is fully paid for at purchase, carries its own cash value and death benefit, and can earn future dividends, so it gradually increases both the policy's protection and its savings value. Key takeaways PUAs are small blocks of paid-up whole life insurance added on top of a policy's base coverage. They are usually bought with dividends from a participating policy, or with extra payments through a paid-up additions rider. Each addition increases cash value and death benefit and needs no further premiums. Dividends are not guaranteed, and overfunding a policy can create tax problems. Whether PUAs make sense depends on your goals, budget and time horizon, so review them with a licensed professional. This article is general education, not insurance, tax or investment advice. Speak with a licensed insurance pr...