South Carolina Life Insurance Practice Exam

A whole life policy that requires premiums for a specified number of years is known as what type of policy?

1. Universal Life

2. Term Life

3. Whole Life

4. Limited Pay Whole Life

The correct answer is: Limited Pay Whole Life

A whole life policy that requires premiums for a specified number of years is referred to as a Limited Pay Whole Life policy. This type of policy allows the policyholder to pay premiums for a set period—such as 10, 15, or 20 years—after which no further premium payments are required. The policy remains in force for the insured's lifetime, with the death benefit payable upon the insured's death and cash value accumulation continuing to grow within the policy. Limited Pay Whole Life policies are particularly appealing to those who may want to ensure they have fully paid for their insurance while still having the lifelong coverage and guarantees associated with whole life. This is different from traditional whole life policies that often require premiums to be paid throughout the insured's life. The other types of policies mentioned do not meet the criteria described in the question. Universal Life is a flexible premium policy that allows policyholders to adjust both the premium and the death benefit. Term Life provides coverage for a specific period and does not accumulate cash value. Regular Whole Life requires premiums for the lifetime of the insured without a designated limited payment term. Therefore, Limited Pay Whole Life is the correct terminology for a whole life policy with a finite premium payment requirement.