Tennessee Life Producer Practice Exam

Which life insurance policy allows for premium payments to cease after a certain period?

1. Whole Life Insurance

2. Term Life Insurance

3. Limited-Pay Life Insurance

4. No-Lapse Universal Life Insurance

The correct answer is: Limited-Pay Life Insurance

The policy that allows for premium payments to cease after a specified period is Limited-Pay Life Insurance. This type of policy is designed so that the insured pays premiums for a limited number of years, after which the policy becomes fully paid-up. This means the insured does not need to make any additional premium payments, yet the policy remains in force for the lifetime of the insured. This feature can be appealing to policyholders who want to have their life insurance coverage in place without the obligation of ongoing payments throughout their entire lifetime. The approach to premium payments varies among life insurance options, which is why understanding this distinction is crucial. Other policies, like Whole Life Insurance, typically require ongoing premiums throughout the insured's life, while Term Life Insurance only provides coverage for a specific period and does not accumulate cash value. No-Lapse Universal Life Insurance provides flexibility in premium payments but does not inherently limit the duration of those payments based on a specified period.