Texas General Lines – Life, Accident, and Health Insurance (LAH05) Practice Test

Paid-up additions are extra, paid-up policies funded by policy dividends that boost the cash value and death benefit. Each year those additions earn interest, and the interest is added to the principal, so money grows on top of money. Because these additions are permanent and don’t require ongoing premium payments, the cash value can continue to grow as long as the policy remains in force and dividends are declared, leading to ongoing compounding. They don’t decrease, they aren’t not credited with interest, and they don’t stay flat—their value keeps expanding through compounding, effectively indefinitely.