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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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