Tennessee Insurance Practice Exam

How long does coverage typically remain on a limited-pay life policy?

1. Until age 65

2. Until age 75

3. Until age 100

4. Indefinitely

The correct answer is: Until age 100

A limited-pay life policy is designed to provide coverage for the lifetime of the insured while requiring premium payments for a specified, limited duration. This choice reflects the nature of such policies, which often conclude premium payments much earlier than the negative aspect of coverage. For example, a policyholder might pay premiums for a period of 10, 20, or 30 years, but once those premiums have been paid, the coverage continues until the insured reaches age 100, which is a common age limit established in life insurance contracts. This attribute makes limited-pay life insurance appealing to individuals who want to secure perpetual coverage without the financial burden of paying premiums throughout their lifetime. The insured remains protected regardless of when they pass away, as long as they have maintained their policy appropriately. Thus, the correct answer accurately describes how long a limited-pay life policy remains in effect.