Legal Definitions - paid-up policy

Definition: A paid-up policy is a type of insurance policy that remains in effect even after all premiums have been paid. It is a contract between the insurer and the policyholder that provides coverage for a specific period of time or for the policyholder's lifetime.

Example: A person purchases a life insurance policy that requires them to pay premiums for 20 years. After 20 years, the person has paid all the required premiums, and the policy becomes a paid-up policy. The policy remains in effect, and the person is still covered by the insurance even though they are no longer paying premiums.

This example illustrates how a paid-up policy works. Once all the required premiums have been paid, the policy remains in effect, and the policyholder continues to be covered by the insurance.