Additional Deposit Privilege

What Does Additional Deposit Privilege Mean?

An additional deposit privilege is a clause in a life insurance policy that allows the policyholder to make unscheduled payments in exchange for increased benefits. This payment option is available before the maturity or expiration of the insurance policy.

Insuranceopedia Explains Additional Deposit Privilege

This clause is particularly suitable for individuals whose finances are strained during the period when they are expected to make scheduled payments for their policy. The lack of a fixed payment schedule alleviates some of the financial pressure on the policyholder. They can make premium payments at a different time, as long as it is before the maturity date. The clause is most common in permanent life insurance policies, where the extra deposits typically grow the cash value or the death benefit. How much each deposit adds depends on your insurer’s formulas and on many of the same factors that affect your life insurance premium, such as age and health when you bought the policy. Not every insurer includes the privilege, so it is worth checking the fine print when comparing the best life insurance companies. However, if the policyholder has taken a loan against their policy, any additional payments will be applied toward repaying the loan.