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While this option presents a little considered option available in managing premiums for a Whole Life policy, it would not be the preferred approach unless there were no other alternatives, since this option substantially reduces the insured's initial death benefit. The paid-up policy will continue to earn dividends, which will slowly increase the overall death benefit as summarized below. This means the total death benefit will be immediately reduced to $325,000 and contractually have no further premiums. A more dramatic option is to take the total death benefit of $611,000 and place the policy on a paid-up status. Of course, because dividends are not guaranteed until paid, the following resulting schedule is subject to some modification. When this source of premium payments is finally exhausted, resume premium payments net of the then-current dividend. During this period, dividends continue to buy paid-up additions. Because this is a Whole Life policy and not flexible premium, there are limits to her ability to adjust the cash flow of future premium payments, and the insurance company will need to be involved in providing scenarios such as the following: Suspend cash premiums, instead making required premium payments from the cash value of paid-up additions for as long as they last.

The policy has accrued an additional $111,000 of paid-up additions death benefit, but the insured has determined that only the original $500,000 is necessary. The annual lifetime policy premium is $20,576. A 58-year-old physician purchased a $500,000 participating Whole Life policy in 1996. The policy owner wants and needs the coverage for the balance of her life, but as retirement approaches, she is concerned that the premium won't be affordable. A Whole Life policy purchased eight years ago is now "costing too much." Note that life settlements are specifically not addressed in these examples, because in each case there is the presumption of an ongoing need for home insurance. Let's consider some typical case examples that might shed light on the often complex process of determining what to do about a homeowner's insurance policy that is not meeting its original expectations.

Once a realistic picture has been drawn, the possibility of replacement can then be considered in proper context. While a replacement policy may be suggested, policy owners should consider the larger picture: What can be done to put the current policy back on track? This is not so much a function of failed policies but of changing external economic factors (and significant volatility) that have adversely affected both interest-oriented policies - Whole Life, Universal Life, and Adjustable Life - as well as investment-oriented policies - Variable Universal Life and Equity Indexed Life.