L&HNationaleasy
A 35-year-old buyer chooses between an ordinary (straight) whole life policy and a 20-pay whole life policy with the same face amount. Compared with ordinary whole life, the 20-pay version will have:
ALower annual premiums and slower cash value growth, with premiums continuing until age 100
Higher annual premiums and faster cash value growth, with all premiums fully ending at policy year 20
CIdentical premium and cash value structure, with only the policy maturity date differing between the two forms
DPremiums payable to age 100 but a guaranteed death benefit that doubles automatically after policy year 20
Why this is the answer
Ordinary whole life spreads premiums to age 100 (or 121 under newer mortality tables), producing the lowest annual outlay among permanent forms. Limited-pay forms — 10-pay, 20-pay, paid-up-at-65 — collect the same lifetime cost of insurance and expense load over a shorter horizon. The result: higher annual premium, faster cash value accumulation, and a policy that is fully paid-up after the limited period while coverage continues for life. Both forms remain non-MEC if structured under the 7-pay test, per IRC §7702A.
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