Limited-Pay Whole Life
Whole life with premiums payable only for a set number of years (such as 20-pay or life-paid-up-at-65) after which the policy is fully paid up while coverage continues.
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Practice This Concept
A whole life policy under which the policyowner pays premiums for a limited period, such as 10 or 20 years, after which the policy is fully paid up for life, is called:
Limited-pay whole life insurance — Limited-pay whole life (for example, 10-pay or 20-pay life) concentrates the premium payments into a shorter period while providing permanent coverage. Because premiums are compressed into fewer years, each premium is higher than it would be under a level-pay whole life contract for the same face amount. Once the payment period ends, the policy is paid up and remains in force for life with no further premiums required. This pattern is one of the premium modes described under the policy types; other patterns include single premium, modified (lower initial premiums that later increase), and level premium.
National insurance concept
A client purchases a whole life policy with premiums payable for only 20 years, after which the policy is fully paid up and coverage continues for life. This policy is:
A limited-pay (20-pay) whole life policy — A limited-pay whole life policy is permanent insurance whose premiums are concentrated into a limited period — here 20 years — after which the policy is paid up and the death benefit continues for the insured's lifetime. Because premiums are compressed into fewer years, each premium is higher than under straight whole life, where premiums are paid for life. Unlike term, it builds cash value and never expires solely from reaching the end of a term, and unlike annual renewable term, the premium is level and coverage does not end at a set age.
National insurance concept
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