Under a 20-pay life policy, when are the premiums fully paid?

Why A is correct

A 20-pay life policy is a form of limited-payment whole life insurance. The insured pays premiums for 20 years, after which the policy is fully paid up and coverage continues for the insured's entire life. Because the premiums are compressed into a shorter period, each payment is higher than under an ordinary life policy of the same face amount, but the policy acquires cash value more rapidly. Once the policy is paid up, the insurer's guarantee of the death benefit continues without any further premium payments being required.

Why the other options are wrong

• A 20-pay policy is paid up after 20 years from issue, not automatically at age 65. A policy issued at age 30 would be paid up at age 50, not 65.
• Premiums stop after 20 years by contract; they are not tied to the cash value equaling the face amount, which would occur only well after the pay period ends. Accordingly, this option is not correct because it does not match the specific rule or product that is described in the question.
• Paying premiums until death describes ordinary, or straight, life insurance, not a limited-payment policy such as 20-pay life. This option therefore does not match the facts presented in the question and is not the correct answer to select.

Memory hook

Twenty-pay life means 20 years of premiums, then lifetime coverage is free.