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 payment life insurance is a great alternative for those who want the peace of mind life insurance provides but don’t want to break the bank. Read on to learn more about how this type of coverage works.
what is limited payment life insurance?
Limited payment life insurance is a type of whole life insurance that allows you to pay the full cost of your coverage up front for a set number of years. You can select limited payment life insurance if you have a whole life policy but want to pay the full cost of your premiums over a set period of time rather than over a lifetime.
Reading: What kind of life insurance
Traditional permanent life insurance premiums are paid throughout a person’s lifetime. When choosing the limited payment whole life option, the length of the payment must be determined at the initial purchase of the policy. premiums are generally paid for the first 10 to 20 years.
You can pay your premiums monthly, quarterly, semi-annually, or annually if you choose to do so over a restricted period of time, usually 10, 15, or 20 years.
There is no option to allow your policy’s cash value growth to pay premiums. instead, they pay the cost of the policy in full over time.
This payment option could be particularly beneficial for those who purchased permanent life insurance later in life and want to stop funding their policy but still want the cash value.
Sometimes money from a qualified retirement plan, such as an IRA, can be used to fund a limited payment life insurance policy.
examples of limited payment life insurance
- 7 pay for life insurance
- 10 pay life insurance
- 20 pays life insurance
- alternatives to life insurance without sproutt medical exam
Who is limited payment life insurance perfect for?
When a person chooses this option, it’s usually because they purchased a whole life policy late in life. however, suppose he wants to receive a monthly income from the cash value of his policy or from dividend payments in retirement. In that case, limited-payment life insurance is a smart alternative, since it eliminates the need to pay a premium in retirement.
If you’re buying life insurance before you retire, you should avoid limited payment coverage. This is because a younger person has more time on their side to compound the interest earned on the cash value. it will just continue to grow when there are no restrictions on what you can put on your policy.
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With a limited payment whole life policy, the cash value benefits are maintained. Cash value is vital as it allows any individual to acquire liquidity at any age or stage of life.
Life insurance policy owners can access liquidity through a policy loan, which means the cash value of your original policy still earns interest.
All life insurance plans include a death benefit, but a death benefit in addition to life benefits makes whole life better.
Most people are familiar with life insurance, which is the expense of insuring your family or designated beneficiary against financial loss in the event of your death. however, whole life insurance goes far beyond what most people think it implies, providing security of death benefits and living benefits that can help pay expenses while you live.
If you’re looking for a life insurance policy that will protect your loved ones without breaking the bank, limited payment life insurance may be the right choice. 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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