Can I stop paying and keep the contract, and what are reduced paid up and extended term?
Frequently yes, where the contract carries non forfeiture provisions and holds enough value to support them. Reduced paid up turns what has accumulated into a smaller amount of fully paid coverage with nothing further due. Extended term keeps the present amount of coverage for a fixed number of years and then stops. Neither happens by itself, both are requested, and both are normally permanent.
What kind of answer this is
- Claim type: Contract fact
- Claim type: Depends on the policy
- Jurisdiction: Contract dependent
That these provisions exist on many permanent contracts is a contract fact. Whether yours offers either of them, and on what terms, is decided by the wording issued to you.
How it works
Both routes spend the accumulated value on coverage instead of on cash. One buys a smaller amount that lasts for life, the other keeps the amount you have and puts a clock on it. Which is available is written in the non forfeiture section of your contract.
The cost or the catch
The word normally does a lot of work here. Once either election is made the original design is over: the payments cannot simply be resumed, and the coverage does not come back. Ask for both figures in writing, beside what continuing would cost.
Where this answer may not apply
- Some contracts offer one of the two and not the other, and a few offer neither.
- Extended term is uncommon on participating contracts and is more often found on older or non participating wording.
- Taking either option usually stops future participations from being credited in the way the original design assumed.
- Neither is a way to release cash. Both keep coverage and give up the ability to pay in.
What to verify in your own contract
- Which non forfeiture options your contract names, quoted from the wording rather than described.
- The coverage amount reduced paid up would buy today, stated by the insurer in writing.
- The number of years extended term would run, if the option exists at all.
- Whether either option can be reversed, and on what conditions.
- What happens to any outstanding balance when the option is taken, since it is usually settled first.
Continue to the full explanation
Review the options before changing the policy.
Sources
- Non forfeiture provisions of the policy contract, insurer specific, verified 2026-08-30
- Canadian Life and Health Insurance Association, published consumer materials, verified 2026-08-30
Accountability and disclosure
- Written by
- José Salloum
- Professional capacity
- Financial security advisor, Canadian Wealth Creation Centre Inc., operating as IBC Financial
- Reviewed by
- Insurance and contract education tier, reviewed under a licensed insurance professional's own authority
- Jurisdiction
- Contract dependent
- Last reviewed
- 2026-08-30
- Version
- 1.0
- Compensation disclosure
- Canadian Wealth Creation Centre Inc., operating as IBC Financial, may receive insurer paid compensation if a policy is purchased. It takes the form of first year compensation followed by renewal compensation, and the amount varies by insurer, product, age, premium, contract design, riders and the arrangement with the managing general agency. No single figure would describe every contract honestly, and none is published here.
- Report a correction
- Info@ibcfinancial.com. Write without a policy number, medical information or account details.
Last reviewed 2026-08-30. By Jose Salloum, Financial Security Advisor.