Nevada Life & Health Insurance Practice Test

Limited-pay whole life insurance policies are specifically structured so that the premiums are paid for a set period, after which the policy is considered "paid up." This means that no further premiums are required, but the policy remains in force, providing a death benefit and accumulating cash value. Typically, this payment period can be for a limited number of years, such as 10, 20 years, or until a certain age, but it is generally designed to ensure that all premiums are paid before the insured reaches age 100.

This structure allows the policyholder to stop making payments earlier than they would with a traditional whole life policy, which requires premiums to be paid throughout the insured's lifetime. The ability to "pay up" before age 100 is a defining characteristic of limited-pay whole life insurance, making this option attractive for individuals who may want life insurance coverage without the ongoing financial commitment into their later years.

The other statements do not accurately describe limited-pay whole life insurance. Premiums are not required to be paid throughout the insured's lifetime, they can typically be paid annually, semi-annually, or monthly based on the policy terms and agreement with the insurer, and they do not accumulate cash value at a slower rate than term policies, as term policies