Limited Payment Policies
Under the terms of these contracts the face of the policy is not payable
until maturity, hut premiums are charged for a limited number of years only
after which the policy becomes, paid-up for its full amount. This method
of paying premiums is applied to-day, if the insured so desires, to practically
all of the leading types of contracts sold. Its most popular application,
however, has been in connection with whole-life policies, and its nature
and advantages will, therefore, be discussed from the standpoint of this
type of contract. Ordinary whole-life policies involve the payment of an
annual level premium until a claim ensues through death. But under the limited-payment
plan premium payments, instead of continuing indefinitely, may be fixed
at almost any number of years, from one to thirty, or even more. Customarily
the payments cease after ten, fifteen, or twenty years, but life-policies
providing for twenty-five or thirty premiums are not uncommon, and in a
mutual company the stipulated term may be. further reduced by applying the
dividends for that purpose. If premiums are limited to twenty years, for
example, and this seems to be the favorite choice of the public, the policy
is known as "a twenty-payment life policy".
Sections in Chapter 7.
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