Arizona Life and Health Practice Exam

Which of these is NOT considered a type of limited payment whole life insurance?

1. Endowment at age 70

2. Single premium whole life

3. Limited pay whole life

4. Modified premium whole life

The correct answer is: Endowment at age 70

An endowment policy provides a benefit if the insured lives to a certain age or dies before reaching that age, and in this case, it is an endowment set to mature at age 70. This type of policy is geared towards providing a lump sum payment at a predetermined time rather than accumulating cash value through limited premium payments over a specified period, which characterizes limited payment whole life insurance. In contrast, single premium whole life involves a one-time payment that funds the whole life insurance policy for the insured's entire life. Limited pay whole life means premiums are paid for a limited time (say 10, 20 years) while providing coverage for the entire lifetime. Modified premium whole life insurance has a lower premium in the initial years that gradually increases, but still falls under the scope of limited premium payments and is characterized by a set payment duration. Thus, endowment at age 70 does not fit within the categories defined by limited payment whole life insurance products, as it is fundamentally different in structure and purpose, focusing instead on a maturity date rather than lifetime coverage funded through limited payments.