Oklahoma Life Producer Practice Exam

In a limited pay life policy, what phrases describe payment structure?

1. Whole, universal, and convertible

2. Time-limited payments until 100

3. Flexible permanent payments

4. Yearly increasing payments

The correct answer is: Time-limited payments until 100

In a limited pay life policy, the payment structure is primarily characterized by specific terms that highlight the duration of premium payments. The phrase that accurately captures this structure is "time-limited payments until 100." This means that policyholders will make premium payments for a designated period rather than throughout their entire life. For example, they may pay premiums for 10, 15, or 20 years, after which the policy remains in force without the need for further payments, often until the insured reaches the age of 100 or passes away. This setup can be appealing for those who wish to limit their financial commitment while still securing a lifetime of coverage. Other options describe features that are not specific to the limited pay life policy. "Whole, universal, and convertible" refers to different types of life insurance policies rather than their payment structures. "Flexible permanent payments" implies a payment structure that allows for variable payment amounts, which contrasts with the fixed payment style typical of limited pay policies. "Yearly increasing payments" suggests a payment method where the premium grows over time, which does not align with the concept of limited pay life insurance, where the payments are defined and consistent over the stipulated term.