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Limited Pay Life Insurance
Limited pay life insurance is one type of whole life insurance policy. But unlike other whole or permanent life policies that will have you paying premiums for a long time, limited pay life insurance can give you lifelong protection with only a limited number of premium payments. However, since these premium payments will be distributed over a shorter period of time, a limited pay life insurance policy will have you paying higher premiums than other types of whole life plans for the same insurance amount.
When You Should Consider Whole Life Insurance Limited Pay Policies
Whole life insurance limited pay policies are a great way to end premium payments before your children go off to college. Given today's astronomical tuition fees, this plan could lessen the strain on your finances when you need it most. This payment plan also makes sense if you want to build your cash assets the fastest way possible, without having to invest in risky investment options (a feature of a variable life insurance). In just a short span of time, a limited pay life insurance policy can give you excellent collateral for a business loan, at a borrowing rate that is much lower than what a bank or financial institution can offer.
Options for Limited Pay Life Insurance
Limited pay life insurance plans can be based on a certain number of years (at least 10 years are typically required) or on your age. In the latter case your limited pay life insurance contract will require you to wrap up premium payments by, say, age 65 or 85, depending on the option you choose. In essence, limited pay life insurance is not a policy feature, in that it only determines the period of time in which you will make your payments, and not the benefits that your policy will offer.
Benefits of Life Insurance Limited Pay Policies
Limited pay life insurance is a program design that gives the policy purchaser an added payment scheme option. It will generally not affect the maturity date and death benefit of your insurance policy. Therefore, a limited pay life insurance plan can apply to a whole life, a universal life, or even a variable universal life policy. It simply gives you a way to pay for the same type of coverage and benefits over a shorter period of time.
Who Should Opt for Limited Pay Life Insurance
This type of payment plan is a good way to take advantage of your income at the peak of your career when you are earning the most. Since you will get all your premium payments out of the way early on, you get added protection in case your income fluctuates due to shifting company fortunes, changing profits, a change of careers, or a bad economy.
Not all insurance companies offer life insurance limited pay policies, so you may have to do a little searching. Still, do not sign up for the first limited pay life insurance coverage you come across. Just like any other policy, a little comparison-shopping will not hurt. That's why we offer free quotes from multiple insurance companies, and lots of specific, up to date insurance information, so you can get the best deal on the best coverage.
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