Reduced Paid-Up Insurance
A nonforfeiture option using the net cash value as a single premium to buy a smaller amount of fully paid-up permanent insurance of the same type.
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Practice This Concept
In an individual life insurance policy, which person holds the rights under the contract during the insured's lifetime, including the right to change beneficiaries, assign the policy, and obtain policy loans?
The policyowner — The policyowner is the party who enters into the contract with the insurer and therefore holds every right the policy grants while the insured is alive. These rights include naming and changing beneficiaries, assigning or transferring the policy, selecting the premium payment mode, borrowing against the cash value through policy loans, exercising nonforfeiture options such as cash surrender or reduced paid-up insurance, and electing settlement options. The insured is merely the person whose life is the subject of the coverage, and the beneficiary has a claim only to the death proceeds payable at the insured's death. Because ownership and being the insured person are separate legal roles, all contractual rights during the insured's lifetime belong to the policyowner.
National insurance concept
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