PSI Ohio Insurance Practice Exam

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Study for the Ohio Insurance Test. Prepare with flashcards and multiple choice questions, each question accompanied by hints and explanations. Excel in your exam!

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Which of the following statements is true about a limited pay whole life policy?

Coverage is temporary
Benefits are paid only if the policy is in force
Coverage continues after the policy is paid-up
The policy has no cash value

The correct answer is: Coverage continues after the policy is paid-up

A limited pay whole life policy is designed so that the policyholder pays premiums for a limited number of years, after which the policy is considered "paid-up," and no further premiums are required. Even though the premium payments cease after this period, the life insurance coverage does not end. It continues for the insured’s lifetime, as long as the policy remains in force and is not lapsed. This type of policy also accumulates cash value over time, which can be accessed by the policyholder while they are alive, and it pays a death benefit to the beneficiaries upon the policyholder's death. Therefore, the assertion that coverage continues even after the premium payments have concluded is accurate, making this statement true in the context of limited pay whole life policies.