Reduced paid-up policy

When a policyholder stops paying premiums on a regular-premium life policy, the policy does not necessarily lapse. If it has a surrender or paid-up value, the insurer must keep it in force as a reduced paid-up policy: the premiums already paid, net of charges and the cost of risk already covered, serve as a single premium for a benefit of the same kind but a lower amount, calculated by the insurer on the policy's technical basis. The policyholder may instead choose surrender, which ends the policy. The paid-up option matters especially for long-term protection policies, whole life or endowment, where stopping premiums after several years should not waste the savings effort already made. The French Insurance Code requires the policy to show paid-up and surrender values at the end of each of the first years, letting the policyholder measure the cost of stopping in advance.