How does a limited payment whole life policy differ from a continuous premium policy?

A limited payment whole life policy is designed so that the policyholder pays premiums for a specified period, after which the policy is considered fully paid up. This means that the policyholder will only need to make premium payments for a limited duration, yet the death benefit remains in effect for the insured's entire life. In contrast, a continuous premium policy requires the policyholder to pay premiums throughout their lifetime to keep the policy active.

This difference underscores the varying payment structures of these two types of whole life policies. With a limited payment policy, the burden of premium payments is reduced to a finite period, which can be appealing to individuals who prefer to have their policy paid off more quickly.

The other choices relate to aspects of whole life policies but do not accurately highlight the primary distinction in the payment structure. For instance, limited payment whole life policies do not inherently provide a lower death benefit compared to continuous premium policies, nor do they lack cash surrender value; in fact, both types typically accumulate cash value over time. Lastly, while the cost of premiums can vary by specific policy features and terms, a limited payment policy often has a higher per-payment cost because it collects the necessary funds for the same death benefit over a shorter payment period, not necessarily a higher overall