What is the name of a life policy in which premiums are paid up within a limited number of years?

• A. Whole life
• B. Term life
• C. Limited payment insurance
• D. Adjustable life

Answer: (C)

Limited payment insurance describes a life policy where premiums are paid for a limited number of years, after which the policy is considered paid up. Even though you stop paying after that set period, the coverage remains in force for the insured's lifetime and a cash value typically builds over time. This differs from term life, which provides temporary coverage with no cash value and ends at the term's expiration, and from standard whole life, where premiums are usually paid for life. It also differs from adjustable life, which allows changes in premium and death benefit. The defining point is the finite premium-paying period, after which no more premiums are due and the policy is paid up.