Prices Increasing soon Prices Increasing Soon

Reduced Paid-up in Term Insurance

Term insurance is one of the most affordable ways of securing your family’s financial future in case something happens to you. But what if due to some unfortunate reasons you can no longer to pay the premiums to keep the policy active? In such cases, you can opt for the reduced paid-up option in term insurance. A reduced paid-up option in term insurance means that the policyholder has stopped paying the premiums for the policy but continues to be covered under the plan’s benefits for the entire policy term. The sum assured on death in this option will be reduced according to the accumulated cash value at that point. 

Read more
Gets ₹1 Cr. Life Cover at just
COVID-19 Covered
The Policybazaar Advantage
Dedicated claim support for family FREE
Upto 10% discount for buying online
Only certified experts will call you on 100% recorded lines
We are rated~
6.7 Crore
Registered Consumers
Insurance Partners
3.4 Crore
Policies Sold

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

By clicking on "View plans" you agree to our Privacy Policy and Terms of use

~Source - Google Review Rating available on:-

Life is Unpredictable! Protect your family’s future
Get ₹1 Crore Life cover starting from ₹384/month+
We don’t spam
Check Your Premium Now
Please wait. We Are Processing..
Get Updates on WhatsApp
The Policybazaar Advantage
Policybazaar Advantage Icon
Dedicated claim support for family FREE
Policybazaar team will help and support you at the time of claim. A personal claim handler from our team of experts will get in touch with you when your nominee applies for a claim on our website.
Policybazaar Advantage Icon
100% calls recorded to ensure no mis-selling
We will make sure you get what is promised by the advisors. We conduct regular monitoring of our calls to make sure you get the best experience.
Policybazaar Advantage Icon
Exclusive lifetime discount upto 5% for buying online
The discounts will be valid for the entire policy payment term and is not available if you choose to buy the insurance through offline agents.
Policybazaar Advantage Icon
Advisors available in your city
Our advisors are available in more than 55 cities across India and can help you at your doorstep in understanding the plans and in documentation.
Policybazaar Advantage Icon
Refund at the click of a button
In case you aren’t happy with your purchase, you can cancel your policy hassle-free at the click of a button. We will help you with the cancellation and refund of your policy.

What is Reduced Paid-up in Term Life Insurance?

Reduced paid-up is an option available in most life insurance plans that allow customers to stop paying the premiums but continue the life cover for their policies. The sum assured in these policies is reduced, hence the title reduced paid-up. This feature is usually available in term return of premium and whole-life insurance variants. The availability of this feature may vary across different plans and you should always go through the policy details before purchasing the most suitable term plan.

one crore term plan

Term Plans


Life Cover

@ Starting from ₹ 16/day+


Life Cover

@ Starting from ₹ 8/day+


Life Cover

@ Starting from ₹ 12/day+

How Does the Reduced Paid-up Option Work?

The reduced paid-up option is applicable only once the policy has acquired a surrender value. Once the policy has acquired surrender value, if you accidentally miss a premium payment, the policy will automatically convert into a reduced paid-up. The new sum assured payable in case of death is reduced as per the reduced basis defined by Reduced Paid-up Criteria (RPU).

How is Reduced Paid-up Value Calculated?

The reduced paid-up sum assured applicable in case of the death of the policyholder during the policy term will be calculated using the formula mentioned below:

RPU Sum Assured = (Number of premiums already paid / Number of premiums to be paid) X Sum Assured

What are the Benefits of Reduced Paid-up Option?

The benefits of opting for the reduced paid-up option in term insurance are as follows:

  • It can help the policyholder to eliminate the premium payments from their expenses especially if they are going through a rough patch financially but still want to stay covered under the policy benefits.

  • The premium amount saved from paying premiums can be used to fulfill other financial goals like paying for other important expenses or investing in a new life insurance policy with better benefits. You can use a term insurance premium calculator to get the estimate premiums you would need to pay for the desired cover.

  • A reduced paid-up option provides policyholders with the peace of mind that their family will be financially secure in their absence even with the reduced sum assured.

  • The option is best suited for retired individuals who are trying to save their retirement budget and live a financially independent life.

  • Reduced paid-up can also help you avoid charges like surrender fees or charges levied by insurance companies due to the loss of future premium payments.

one crore term plan

Secure Your Family Future Today


Term Plan Starting @ ₹449/month+

Get an online discount of upto 10%+

Compare 40+ plans from 15 Insurers

+Standard T&C Applied

Who Should Opt for the Reduced Paid-up Option?

There are several reasons why someone would opt for the reduced paid-up option. Some of them are:

  • Suffering through Financial Troubles:

    People who are suffering through some financial troubles and are unable to afford regular premium payments can convert their term life insurance into a reduced paid-up policy. Converting the policy into a reduced paid-up can help the policyholder stay covered under the plan without having to risk policy termination due to missing premium payments.

  • Changing Life Cover Needs:

    Due to changes in life stages or if the policyholder recently purchased a new term plan with better benefits, he/she might not need the previous policy’s benefits anymore. In such cases, the policyholder can convert the previous policy into a reduced paid-up and stay covered under the last plan for additional coverage.

    Note: Know what is term insurance first and then buy a term plan for your loved ones.

Should you Surrender the Policy or Opt for a Reduced Paid-up Option?

It is recommended to opt for the reduced paid-up option over policy surrender as in paid-up the coverage continues even after you have stopped paying the premiums. In case of an eventuality, your family will receive the reduced sum assured on death which can help them pay for their financial obligations in your absence. In term insurance, the reduced paid-up option is available in the term return of premium variant and is considered beneficial since the policy cover continues even after the end of premium payments.

On the other hand, the surrendering of the policy would mean that all the premiums paid up until the point of policy surrender are forfeited and in case of your unfortunate death, no benefit will be paid to your family.

Various insurance companies also offer the Special Exit Option (also known as Term insurance with 100% refund of premium at NO COST) in the base term plans (without Return of Premium), which allows policyholders to exit the plan, mid-policy term, and receive their premiums paid at the surrender of the policy. The term insurance with 100% refund of premium at NO COST feature is available at no extra cost and the premiums for these plans are almost 49% more affordable than the Term Return of premium option.

Final Thoughts

A reduced paid-up option is preferred over the surrender option in term insurance since the life coverage continues even after the end of premium payments. People who are looking to secure the lives of their loved ones but are struggling with paying the term insurance premiums can convert their plan into a reduced paid term plan and continue to enjoy the benefits of being covered under the policy benefits.

Note: Check out the best term insurance plan in India and choose one that suits your requirements.

Premium By Age

Term insurance articles

  • Recent Article
  • Popular Articles
07 May 2024

Term Insurance for 45K Salary Individuals

In life, unpredictability looms large, and while you may

Read more
07 May 2024

Term Insurance for 30K Salary Individuals

Turning your dreams into reality, like owning your home and car

Read more
11 Apr 2024

Government Term Insurance Schemes 2024

The Government of India is committed to the welfare and

Read more
03 Apr 2024

How Policybazaar Helps With Dedicated Claim Assistance

Mr. Kumar has been working with a Public sector bank in Delhi.

Read more
19 Mar 2024

Kotak Term Insurance Login

Kotak Life Insurance is one of the leading insurers offering a

Read more
20 Aug 2014

Term Insurance for Women in India

Term insurance for women is a type of life insurance specifically designed for fulfilling women’s needs and

Read more
03 Dec 2020

What Is Saral Jeevan Bima

Saral Jeevan Bima (SJB) is a simple term insurance plan that offers financial protection for policyholder’s

Read more
13 Apr 2021

2 Crore Term Insurance Plan

2 Crore term insurance provides cover amount of 2 Crore as death benefit to your family in the event of your

Read more
07 Mar 2023

TATA AIA Smart Sampoorna Raksha Param Rakshak Plus

TATA AIA Smart Sampoorna Raksha Param Rakshak Plus is a comprehensive life insurance policy for individuals

Read more
20 Sep 2021

Term Insurance for Diabetics

A lot of people suffer from diabetes in India and one of the most common challenges they face is getting suitable

Read more
Need Help? Request Callback
View Plans
Download the Policybazaar app
to manage all your insurance needs.