Life Insurance FundamentalsQuestion 125 of 315
Sara purchases a 20-pay whole life policy at age 30. Which statement is correct?
a.She must pay premiums until age 100
b.Coverage ends 20 years after purchase
c.She pays no premium at all and the policy is self-funding
d.Premiums are paid for 20 years; coverage continues for the rest of her life
Explanation
Limited-pay whole life concentrates the lifetime cost of the policy into a shorter premium-paying period. With 20-pay whole life, Sara pays for 20 years and then the policy is paid up, but coverage continues for her entire life.
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