Virginia State Life, Health and Annuities Practice Exam

A continuous premium whole life policy and a limited payment whole life policy primarily differ in the time period over which premiums are paid. In a continuous premium whole life policy, the insured pays premiums throughout their entire lifetime, as long as the policy is in force. This type of policy provides lifelong coverage, and the premiums are typically lower on a per-payment basis because they are spread out over a longer period.

On the other hand, a limited payment whole life policy requires premiums to be paid for a specified, shorter period—such as 10, 20, or 30 years—or until a certain age. After this premium payment period ends, the policy remains in force, and no further premiums are required. This allows the insured to have coverage for life while having a finite time commitment for payments, often resulting in higher premiums during the payment period compared to a continuous premium policy.

The other answer choices do not accurately reflect the key difference between these two types of whole life policies. For example, the death benefit amount is generally defined in the policy terms and can vary independently of the premium structure. Similarly, the type of investment vehicles used and the age of the insured may have relevance in different contexts, but they are not distinguishing characteristics between continuous and limited payment