What is a Paid-Up Policy?
When you stop paying premiums on a LIC policy that has been in force for at least 3 years, LIC doesn't cancel it. Instead, the policy becomes "paid-up" — meaning it continues with reduced benefits until maturity.
💳
Premium Paid: 3+ Years
Policy becomes paid-up with reduced SA
❌
Premium Paid: Less than 3 Years
Policy lapses — all premiums lost
Paid-Up SA Formula
Paid-Up SA = Original SA × (Premiums Paid ÷ Total Premiums Payable)
📐 Example: Jeevan Anand, ₹10L SA, 20-Year Term
| Original SA | ₹10,00,000 |
| Policy Term | 20 years (yearly mode → 20 premiums total) |
| Premiums Paid | 10 years (10 premiums) |
| Paid-Up SA | ₹10,00,000 × 10/20 = ₹5,00,000 |
| Accrued Bonus (10 yrs) | ₹50 × 1000 × 10 = ₹5,00,000 |
| Paid-Up Maturity Value | ₹5,00,000 + ₹5,00,000 = ₹10,00,000 |
*Compare to full maturity (~₹20L+ if all 20 premiums paid). You receive approximately half by stopping halfway.
What Changes When Policy Becomes Paid-Up
| Feature | Active Policy | Paid-Up Policy |
|---|
| Premium Payment | Required ✅ | Not Required ✅ |
| Sum Assured | Full SA ✅ | Reduced (Paid-Up SA) ⬇️ |
| Life Cover | Full Cover ✅ | Reduced Cover ⬇️ |
| Bonus Accrual | Continues ✅ | STOPS ❌ |
| Existing Bonus | Preserved ✅ | Preserved ✅ |
| Maturity Benefit | Full Amount ✅ | Reduced Amount ⬇️ |
| Loan Facility | Available ✅ | Available ✅ |
| Tax Benefits (80C) | Yes ✅ | No (no premium paid) ❌ |
Year-Wise Paid-Up Value — ₹10L SA, 20-Year Term
| Year Stopped | Fraction | Paid-Up SA | Accrued Bonus | Paid-Up Maturity | Loss vs Full |
|---|
| Year 1-2 | — | Policy VOID — All premiums lost | 100% |
| Year 3 | 3/20 | ₹1,50,000 | ₹1,50,000 | ₹3,00,000 | ~85% |
| Year 5 | 5/20 | ₹2,50,000 | ₹2,50,000 | ₹5,00,000 | ~75% |
| Year 10 | 10/20 | ₹5,00,000 | ₹5,00,000 | ₹10,00,000 | ~50% |
| Year 15 | 15/20 | ₹7,50,000 | ₹7,50,000 | ₹15,00,000 | ~25% |
| Year 20 (Full) | 20/20 | ₹10,00,000 | ₹10,00,000 | ₹20,00,000+ | 0% |
*Approximate values. Bonus assumed at ₹50/1000/yr. Full maturity includes FAB which adds more. Actual bonus stops at the year you stop paying.
Your 3 Options with a Paid-Up Policy
🏆 Option 1: REVIVE (Best Option)
Pay all unpaid premiums + ~9.5% interest and restore the policy to full active status. Full SA, full bonus, full maturity.
✅ Best returns | ✅ Full life cover | ✅ Bonus resumes
→ Read Revival Guide
⏸️ Option 2: KEEP PAID-UP (OK Option)
Do nothing — policy stays with reduced SA until maturity. No more premiums needed. You receive the reduced maturity amount at term end.
✅ No more payments | ⬇️ Reduced payout | ❌ No new bonus
❌ Option 3: SURRENDER (Last Resort)
Terminate the policy and take the surrender value immediately. You get cash now, but it's the lowest payout — typically 30-50% of what you'd get by keeping it paid-up until maturity.
❌ Lowest payout | ❌ Life cover gone | ❌ Everything lost
→ Read Surrender Value Guide
💡 Expert Tip (Haresh Hirapara): If you can afford to revive — always revive. The revival cost (premiums + 9.5% interest) is far less than the value you recover. If you truly cannot afford revival, keep the policy paid-up — never surrender unless absolutely desperate. A paid-up policy still gives you maturity plus existing bonus with no further payments. Surrendering is almost always the worst option. Consult your LIC branch to explore all options.
🧮 Calculate Your Maturity Amount →
Frequently Asked Questions
What is a paid-up policy in LIC?+
A paid-up policy is one where you've stopped paying premiums after at least 3 years. LIC reduces the Sum Assured proportionally using the formula: Paid-Up SA = Original SA × (Premiums Paid ÷ Total Premiums). The policy continues with reduced benefits until maturity.
How is paid-up value calculated?+
Paid-Up SA = Original SA × (Premiums Paid ÷ Total Premiums). For ₹10L SA, 20yr term, 10 premiums paid: ₹10L × 10/20 = ₹5L. At maturity, you receive this plus accrued bonus (from the years you did pay). These are approximate calculations.
Does bonus still accrue on a paid-up policy?+
No. Bonus stops accruing from the date the policy becomes paid-up. However, all bonus that was already accrued while you were paying premiums is preserved and will be paid at maturity along with the paid-up SA.
Can I revive a paid-up policy?+
Yes! Revival is possible within 5 years of the first unpaid premium. Pay all dues plus approximately 9.5% interest and submit a health declaration/medical. Revival restores full SA, resumes bonus, and is almost always the best option. See our
Revival Guide for the full process.
What is the difference between paid-up and surrender?+
Paid-up = policy continues with reduced SA until maturity (you still get a payout). Surrender = policy is terminated immediately and you get the surrender value (much less). Paid-up is better because you retain life cover and receive a higher total payout at maturity.
Should I keep my policy paid-up or revive it?+
Revive if possible. Revival restores full SA, resumes bonus, and gives maximum maturity. The interest cost (~9.5%) is low compared to the value recovered. Keep paid-up only if you genuinely cannot afford premiums. Consult a financial advisor for your specific situation.
⚠️ Disclaimer
This article is for educational and informational purposes only. LIC-Calculator.com is not affiliated with LIC of India. Paid-up values and maturity amounts shown are approximate estimates. Actual values depend on the specific plan, bonus declared, and policy terms. For exact paid-up value, contact your LIC branch or check your policy statement.
This is not financial advice. Please consult a certified financial advisor before making decisions about your insurance policy.