Which term describes a permanent life insurance policy with limited premium payments?

Which term describes a permanent life insurance policy with limited premium payments?

• A. Whole life policy
• B. Term policy
• C. Limited pay policy
• D. Universal life policy

Answer: (C)

A limited pay policy. The main idea is a permanent life policy where you finish paying premiums after a set period, yet the coverage remains in force for the insured’s lifetime. With limited pay, you’re paying for a defined number of years (for example, 10-, 20-, or 20-pay life), after which no more premiums are due, but the policy stays paid-up and provides lifelong coverage with accumulated cash value. This distinguishes it from term insurance, which ends after its fixed term, and from universal life, which offers flexible premiums, and from traditional whole life, which typically requires ongoing premiums for life.

A limited pay policy. The main idea is a permanent life policy where you finish paying premiums after a set period, yet the coverage remains in force for the insured’s lifetime. With limited pay, you’re paying for a defined number of years (for example, 10-, 20-, or 20-pay life), after which no more premiums are due, but the policy stays paid-up and provides lifelong coverage with accumulated cash value. This distinguishes it from term insurance, which ends after its fixed term, and from universal life, which offers flexible premiums, and from traditional whole life, which typically requires ongoing premiums for life.