How is reduced paid-up insurance obtained?

Reduced paid-up insurance is obtained by converting the accumulated cash surrender value (CSV) of an existing life insurance policy into a single premium that will provide a reduced level of insurance coverage. This process allows the policyholder to continue having life insurance protection without requiring further premium payments, leveraging the accumulated savings from the original policy.

When a policyholder utilizes the CSV to obtain reduced paid-up insurance, the new policy's face amount will typically be lower than the original policy, but it will remain in force for the lifetime of the insured as long as there are no further premiums required. This option is commonly chosen when the policyholder can no longer afford the premiums on the original policy but still wishes to maintain some form of life insurance coverage.

The other options don't align with how reduced paid-up insurance is structured. Paying double premiums would not typically result in reduced paid-up coverage, applying for a new policy would not utilize the cash value of the existing policy, and increasing the face amount of the policy doesn't relate to reducing coverage. Hence, the conversion of the CSV into a single premium for reduced insurance coverage is the correct and most efficient method to obtain reduced paid-up insurance.