Life Insurance FundamentalsQuestion 125 of 716
Sara purchases a 20-pay whole life policy at age 30. Which statement is correct?
a.Coverage ends 20 years after purchase, on the date the final premium payment is made
b.Premiums are paid for 20 years; coverage continues for the rest of her life
c.She pays no premium at all because the policy funds itself entirely out of policy dividends
d.She must keep paying premiums every year until she reaches age 100, when the policy endows
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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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)