In a Limited-Pay Life policy, premiums are paid for a specified period, but coverage lasts for the insured's lifetime. Which statement best describes this arrangement?

• A. Premiums are paid for a limited period, but coverage lasts a lifetime
• B. Premiums are paid for a limited period, but coverage ends at the end of the premium period
• C. Premiums are paid for life, and coverage lasts a lifetime
• D. Premiums are paid in a lump sum and never change

Answer: (A)

Limited-Pay Life distinguishes how long you pay premiums from how long the coverage lasts. In this type of policy, you pay level premiums for a defined, finite period (such as 10 or 20 years), but the life insurance protection continues for the insured’s lifetime. After the payment period ends, premiums stop, yet the policy remains in force with a guaranteed death benefit and typically builds cash value.

That’s why the statement that best describes the arrangement is that premiums are paid for a limited period, but coverage lasts a lifetime. The other options don’t fit: one implies coverage ends when the premium period ends, which isn’t true; another suggests premiums are paid for life, which would describe a standard continuous-premium policy; and one mentions a lump-sum prepaid amount, which describes a single premium arrangement rather than limited-pay.