A permanent life insurance policy in which the policy owner pays premiums for a specified number of years is called a

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

Answer: (B)

A limited pay policy is a permanent life policy where you pay premiums for a specified number of years, after which no further premiums are due, yet the coverage remains in force for the insured’s lifetime and builds cash value. This combines lasting protection with a finite paying period, often with higher premiums during those years to finish payments earlier.

This differs from a term policy, which provides coverage for a fixed term and typically has no cash value. It also differs from a whole life policy, where premiums are usually paid for life to keep the policy in force. Universal life offers flexible premiums and adjustable cash value/death benefit rather than a fixed paid‑up period.