Which of these would be the best example of a limited pay life insurance policy?

• A. Term life
• B. Universal life with premiums paid up after 20 years
• C. Whole life policy with premiums paid up after 20 years
• D. Endowment policy

Answer: (C)

Limited pay life means you pay premiums for a fixed period, and after that period ends, the policy remains in force for the insured’s life without further payments. The best example is a whole life policy with premiums paid up after a set period (like 20 years). This structure ensures permanent coverage while the payer stops paying once the paid-up period is complete, and cash value can accumulate during the payment period.

Term life provides temporary protection that ends when the term ends, so it isn’t a limited pay life. A universal life policy with premiums paid up after 20 years could be paid-up, but universal life is built around flexible premiums and cash value, making it less typically described as the classic limited-pay whole-life example. An endowment policy is designed to pay at a specified end date or upon death, rather than providing lifetime coverage after a finite payment period.