Premium Holiday

A Premium Holiday refers to a period during which a policyholder is not required to pay regular insurance premiums, while the coverage under the policy continues without interruption. This feature is most commonly associated with Universal Life and other permanent life insurance policies that have accumulated sufficient cash value to cover the ongoing costs of insurance and administrative fees.

The ability to take a premium holiday depends on the performance of the investment accounts within the policy and the available fund value relative to the policy’s ongoing expenses.

Key Features of a Premium Holiday

Important Considerations

• ‍‍A premium holiday does not mean that the policy is free. Charges continue to apply and are drawn from the investment or cash value inside the policy.
• If the fund value becomes insufficient, the policy may lapse unless additional premiums are paid.
• Some policies may allow multiple premium holidays over the life of the contract, while others may restrict this feature.
• Taking a premium holiday may impact the long-term performance of the policy or reduce the death benefit if not managed properly.

Summary
A Premium Holiday offers flexibility to policyholders by allowing temporary relief from premium payments without losing coverage, provided the policy has built up sufficient internal value. It is a useful feature during financial strain or temporary income changes, but should be carefully monitored to avoid unintended policy lapse.