Richard Canfield explains reduced paid-up (RPU) insurance: you stop paying premiums but your death benefit shrinks and the policy stops growing. RPU only makes sense if you'd otherwise cancel the policy entirely.
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People talking about RPUING a policy. It stands for reduced paid up. It's taking a policy and saying, hey look, we don't ever want to put another dime into this policy. Let's take what's in there and let's find out how much remaining amount of insurance we're going to reduce the policy to a reduced amount, but a paid up amount so we never have to put another diamond. If you wanted to put more in, you actually can't put any more in because it won't allow any more premium. The only thing that grows a policy or grows a system of policies, pure and simple, is more premium. So if you wanted to grow and you were thinking long range, like Nelson Nash talks about his very first golden rule, to think long range. If you're going to go and RPU or reduce and then pay up a policy so you can never put any more into it, you're killing it. Is there a place where maybe an RPU makes sense? Well, it's a non forfeiture option. If the only other option a person had was to cancel the policy outright and there was an option to maintain some kind of insurance coverage, hey, there's a viable reason there that's called a non forfeiture option, which gives you some capacity to do something different.
