If you would like to increase the value and practicality of your life insurance plan, adding a paid up additions rider also known as PUA could be a great strategy for you.
This insurance add-on is a smart move for anyone seeking financial freedom. But how do you know if a paid up additions (or PUA) rider is right for your needs?
Read on to learn everything you need to know about paid up additions and how they can help you meet your financial goals.
What Are Paid Up Additions – PUAs?
You may have heard your financial advisor sing the praises of paid up additions. This feature can make your life insurance policy substantially more valuable as a wealth-building tool. However, before we jump into explaining how it works, it’s important to understand how a whole life insurance plan can make you money.
Unlike term life insurance, whole life insurance policies retain cash value. As you pay your monthly premium, think of it like you’re putting some of that premium into a high-yield savings account. Over time, your whole life insurance plan earns interest and potentially dividends, increasing its value.
As your policy’s cash value increases, you can borrow money from what you’ve accumulated in your policy. When you’re able to loan money to yourself, you basically become your own bank. This is part of our Infinite Banking plan for financial freedom.
Paid up additions are an optional, supplemental addition to your whole life insurance plan. PUAs can be added at the beginning of your policy to help raise your cash value quicker, or they can be added to your policy later to increase your overall benefit. Essentially, PUAs are an added premium in your policy that will increase your overall death benefit and your policy’s cash value.
PUAs offer more flexibility and earning potential for your policy. They can help you increase your policy’s worth without additional medical underwriting. Some people use PUAs to increase their overall benefit years after taking their policy out.
What is a PUA Rider?
A paid up additions rider is a supplemental policy feature for your whole life insurance plan. Adding a rider to your policy is a great way to consistently add immediate cash value to your policy. With a PUA rider, you can put money into your policy, have that money accrue dividends, and easily or borrow that part of the policy.
Depending on your plan, you may be paying more into a paid up additions rider or into your base premium. If you opt for a PUA rider, it’s important to understand what money is going toward the rider and what is going towards your premium. That can offer a good idea of how soon the cash value will be available to borrow against.
If you choose to transfer the cash value of another life insurance policy to a new whole life policy, your 1035 tax-free exchange will create a PUA rider. This is an automatic feature, so if your financial team recommends this move, you will not need to take additional steps to claim your paid up additions rider.
PUA riders can be added to your insurance plan at any time, but adding them to your initial policy can help grow your plan’s cash value quickly. Many financial experts refer to PUA riders as the best way to create a cash-rich, ‘supercharged’ policy that allows for Infinite Banking.
What are the Benefits of PUAs?
If your whole life insurance company provides dividends, PUAs are a great way to get a bigger piece of the pie.
When you buy paid up additions, you essentially add the purchase value into an account to accrue guaranteed
cash value growth and increase your dividends. If you are looking to save money and want to earn money on a lump sum amount, buying a PUA can be a great way to let your money make dividends. They can then be used to buy more PUAs, ultimately increasing your policy’s total cash value.
There are two major ways to use the money from your whole life insurance policy: take out a loan against it, or cash in PUAs. Taking a loan out against your policy allows you to access the cash value without interrupting the ability for your
cash value to continue compounding, though you will have to repay the policy loan with interest. Surrendering PUAs allows you to withdraw money you invested in your policy without paying yourself back, like a savings account.
PUAs are a stellar way to earn more money tax-free, especially for younger people looking to boost their policy’s value.
How Do I Get PUAs?
Whether you’re getting a new whole life insurance policy or have one already, you can add one or many PUAs to increase its value.
This rider can help your policy gain cash value quicker than a policy without it. Getting a PUA rider is also a great way to boost the value of your existing policy and death benefit.
Some whole life insurance plans let you buy PUAs with dividends. In fact, this may be the default option to reinvest your dividends with your insurance provider!
PUA options can vary from company to company. Make sure you speak with us and review your whole life insurance plan in detail to ensure that the plan is right for you.
Increase Your Policy’s Cash Value Today
One of the best benefits of whole life insurance is that it can offer significant financial benefits for your future. Paid up additions are part of what makes that possible. Boosting the value of your whole life insurance policy is easy when you have the right strategy in place.
Infinite Banking doesn’t have to be difficult! We’re here to guide you on how to become your own bank with ease. Contact us today for a free consultation to see how whole life insurance and PUAs fit into your financial goals.
