Oklahoma Life Producer Practice Exam

What types of limited pay policies are commonly available?

1. Annual and semi-annual payment plans

2. 10 pay life, 20 pay life, and paid-up at 65

3. Term and whole life policies

4. Flexible premium and universal life

The correct answer is: 10 pay life, 20 pay life, and paid-up at 65

Limited pay policies are designed to allow policyholders to pay premiums for a specified period rather than throughout their entire life. This can make them an attractive option for individuals who want coverage without ongoing lifetime payments. The correct answer highlights specific types of limited pay life insurance policies: 10 pay life, 20 pay life, and paid-up at 65. In these cases, a policyholder pays premiums for either 10 or 20 years, or until the insured reaches 65 years of age, at which point the policy is considered fully paid-up. This means that the policy will provide coverage for the lifetime of the insured without requiring further premium payments after this limited period. Understanding these specific limited pay terms is crucial for both insurance producers and clients, as they directly address the needs for savings on premium payments while still ensuring long-term coverage. Each of these policies has structured timelines, making them appealing for planning financial obligations and life stages. In contrast, the other options do not pertain specifically to the concept of limited pay policies. Annual and semi-annual payment plans refer to payment frequency rather than policy types, term and whole life policies indicate broader categories of life insurance that may or may not have limited pay options, and flexible premium and universal life pert