Oklahoma Life Producer Practice Exam

In terms of premium payments, which is characteristic of a Limited Pay Whole Life policy?

1. It decreases over time

2. It remains level for the term

3. It is paid for a limited time

4. It fluctuates based on age

The correct answer is: It is paid for a limited time

A Limited Pay Whole Life policy is characterized by premium payments that are made for a limited period rather than the entire life of the insured. This means that the policyholder will pay premiums only for a specified number of years—such as 10, 20, or until a certain age—after which no further premiums are required. Despite the limited payment period, the policy remains in force for the lifetime of the insured, allowing for a death benefit to be paid out regardless of when that occurs, provided the policy is in force. This structure benefits policyholders who may prefer to have a shorter commitment while still securing lifelong coverage, as they can stop paying premiums after the limited payment period is completed, unlike some other types of whole life policies that require payment throughout the insured's life. This makes it an appealing option for individuals looking for a balance between affordability and long-term protection.