Limited Pay Life Insurance: What You Need to Know

Shawn Plummer

CEO, The Annuity Expert

If you’re like most people, you want to make sure your loved ones are taken care of financially if something happens to you. But what if you can’t afford the high premiums of traditional life insurance? Limited-pay life insurance is an excellent alternative for those who want the peace of mind that comes with life insurance but don’t want to break the bank. Read on to learn more about how this type of coverage works.

What is Limited Pay Life Insurance?

Limited pay life insurance is a type of whole life insurance that allows you to prepay for the entire cost of your coverage for a fixed number of years. You may select limited-pay life insurance if you have a whole-life policy but want to pay for the total cost of your premiums for a certain period instead of over a lifetime.

Traditional permanent life insurance premiums are paid for the whole duration of an individual’s life. When choosing the limited pay whole-life option, the payment length must be determined at the initial purchase of the policy. Premiums are typically paid over the first 10 to 20 years.

You may pay for your premiums monthly, quarterly, semi-annually, or annually if you select to do so in a limited time period—typically 10, 15, or 20 years.

There is no option to allow their policy’s cash value growth to pay the premiums. Instead, they pay for the cost of the policy in its entirety over time.

This payment option could be particularly beneficial for those who bought permanent life insurance later in life and want to stop funding their policy but still want the cash value.

Sometimes, a qualified retirement plan such as an IRA can fund a limited-pay life insurance policy.

Limited Pay Life Insurance Examples

Who Is Limited Pay Life Insurance Perfect For?

Limited-pay life insurance is perfect for individuals who want life insurance coverage for life that requires premium payments to be made over a fixed period of time instead of the rest of a person’s life.

Shop and compare whole life insurance quotes.

Cash Value

With a limited pay whole-life policy, the cash value benefits remain. Cash value is vital since it allows any individual to acquire liquidity at any age or stage of their life.

Owners of life insurance policies can access liquidity through a policy loan, meaning that the cash value in their original policy still earns interest.

Death Benefit

A death benefit is included in all life insurance plans, but death and living benefits improve whole-life coverage.

Most individuals are familiar with life insurance, which is the expense of insuring your family or designated beneficiary from financial loss in the event of death. However, whole life insurance goes far beyond what most people think it entails, providing death benefit security and living benefits that can help you pay for expenses while alive.

Next Steps

If you’re looking for a life insurance policy that protects your loved ones without breaking the bank, limited-pay life insurance may be the right option. Contact us today to get a quote and see how much money you could save. Then, we’ll work with you to find a policy that fits your needs and budget.

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Frequently Asked Questions

What is a limited-pay life insurance policy?

A limited-pay life insurance policy is a type of life insurance that requires premium payments to be made over a fixed period of time.

Is limited pay a good option?

Limited-pay life insurance can be a good option for individuals who want permanent life insurance coverage and do not want to pay premiums for the rest of their lives.

What is the difference between a whole life policy and a limited pay policy?

A whole life policy requires premium payments over the insured’s life. In contrast, a limited pay policy requires premiums to be paid over a fixed time period.

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

Coverage remains in place for the rest of the insured’s life as long as all premiums are paid in full.

What is a 10-year limited payment life insurance?

10-year limited payment life insurance is a type of life insurance policy in which the insured pays premiums for ten years, and coverage remains in place for the duration of the insured’s life. After ten years, no more premiums need to be paid.

How long does coverage continue on a limited-pay whole-life policy?

Coverage on a limited-pay whole-life policy continues until the insured dies.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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