L&HTexaseasy

A client purchases a 'Life Paid-Up at 65' whole life policy at age 35. What is true about this policy?

Premiums end at age 65, and coverage then continues for life

BThe policy expires when the insured reaches age 65

CThe death benefit automatically doubles at age 65 because the policy is fully funded

DPremium payments continue for life, but the premium amount is locked in at age 65

Why this is the answer

Limited-Pay Life compresses the premium-payment period while maintaining permanent (whole-life) coverage. A 'Life Paid-Up at 65' policy for a 35-year-old means the policyowner pays premiums for 30 years (ages 35-65), after which the policy is fully paid-up: no more premiums are ever owed, yet the death benefit remains in force for the insured's entire life. Premiums are higher than ordinary whole life (because fewer payment years must fund lifetime coverage), so cash value accumulates faster. Common variants: 20-Pay Life (premiums for 20 years), 30-Pay Life, Life Paid-Up at 65. This appeals to clients who want to eliminate premium obligations by retirement. See TX Outline §I.A.

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