What do paid-up additions do to a whole life insurance policy?

Paid-up additions in a whole life insurance policy serve to permanently increase the death benefit of the policy. When a policyholder opts for paid-up additions, they are using dividends from the policy to purchase additional amounts of coverage without the necessity of continuing premium payments for those additions.

This effectively increases the total face amount of the insurance because each addition contributes to the overall coverage offered by the policy, enhancing the financial protection provided to beneficiaries upon the insured's death. Additionally, paid-up additions grow in cash value and may earn dividends, further benefiting the policyholder.

The enhancement of the death benefit is a key feature that makes paid-up additions an attractive option for those looking to increase their whole life insurance coverage and long-term financial planning.