What is a limited pay life insurance policy?
Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states.
After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in…
Full Bio →
Written by
Rachael Brennan
Licensed Insurance Agent
Benjamin Carr was a licensed insurance agent in Georgia and has two years’ experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.
Full Bio →
Reviewed by
Benji Carr
Former Licensed Life Insurance Agent
UPDATED: Jan 5, 2022
Advertiser Disclosure
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
Quick Facts
A limited pay life insurance policy allows you to pay your insurance premiums in full within a certain time frame
Limited pay policies work well for people who prefer not to pay premiums as they mature
Most companies allow you to select anywhere from a 10- to 25-year term in which to pay your insurance premiums
There are many different options in regard to life insurance policies. No matter your budget, there is likely a life insurance policy that could work for you and benefit your loved ones.
One type of permanent life insurance policy that isn’t as common as others is a limited pay life insurance policy.
With a limited pay life policy, you pay your premiums in full within a set number of years. Once the years have passed, you will no longer owe your insurance company premium money, but you will continue to have your insurance benefits until you pass away.
Continue reading to learn more about limited pay life insurance and whether or not this type of policy would be appropriate for you. And be sure to use our free quote tool above to compare rates from top life insurance companies in your area today.
What is a limited pay life insurance policy?
With a limited pay life insurance policy, you can pay off the entirety of your life insurance premiums within a set number of years. Once your premiums are paid in full, you no longer have to make payments on the plan; however, the plan is still active.
The major benefit of a limited pay life insurance policy is that you don’t have to worry about making life insurance payments as you get older. This could mean that you cease paying around retirement age, depending on the amount that you pay in monthly premiums.
The payment plan for a limited pay life insurance policy is similar to a term insurance policy in that you can select a term — anywhere from 10 to 25 years — in order to pay your premiums in full.
Your life insurance quotes are always free.
Secured with SHA-256 Encryption
How much is limited pay life insurance?
It’s impossible to know how much you would pay in life insurance rates with a limited pay policy until you decide which type of policy you want, whether you want annuities or riders, and the amount of time you want to take to pay off the policy.
The shorter the time frame you choose to pay off your policy, the more expensive your monthly rates will be. However, the earlier you pay off your policy, the faster you’ll see growth in your policy’s cash value.
Limited pay life insurance policies are a type of whole life insurance. The table below reveals average monthly whole life insurance rates based on the amount of the policy, a person’s age, and gender.
Average Monthly Whole Life Insurance Rates by Age & Gender
Policyholder Age$100,000: Male Average Monthly Rates$100,000: Female Average Monthly Rates$250,000: Male Average Monthly Rates$250,000: Female Average Monthly Rates$500,000: Male Average Monthly Rates$500,000: Female Average Monthly Rates
25$93.70$84.91$225.12$203.14$444.14$400.19
30$107.71$97.35$260.14$234.24$514.19$462.39
35$128.24$112.93$311.47$273.19$616.84$540.29
40$153.90$132.15$375.62$321.24$745.14$636.39
45$190.79$156.17$467.84$381.29$929.59$756.49
50$234.90$191.66$578.12$470.02$1,150.14$933.94
55$294.84$243.17$727.97$598.79$1,449.84$1,191.49
60$399.24$311.63$988.97$769.94$1,971.84$1,533.79
65$528.00$421.69$1,310.87$1,045.09$2,615.64$2,084.09
#blank##blank##blank##blank##blank##blank#
As you can see, the older you are — and the larger the policy you purchase — the more expensive your premiums will be.
What are the limited pay life insurance pros and cons?
The most immediate benefit of a limited pay life insurance policy is the ability to achieve a paid in full status.
Limited pay life insurance policies also have the potential to accrue a larger cash value and more immediate dividends than a standard whole life insurance policy. If you add on some sort of straight life policy annuity, you could see a good amount of value associated with your policy.
If you want to use your life insurance as a post-retirement income source, a limited pay policy may work better for you than a whole life policy or a level term life insurance option.
The biggest downfall of the limited pay life insurance policy is the expensive premiums. To choose a limited pay policy, you will need to pay a substantial amount of money up front for a reasonable cash value and death benefit.
Another aspect to consider is the fact that some riders and annuities available for standard whole life policies are not an option with a limited pay policy.
Lastly, where other types of life insurance policies have the potential to offer a bit of flexibility when it comes to premium payments, limited pay policies do not offer much pliability.
Should I purchase a limited pay life insurance policy?
If you know the amount of policy you desire and the death benefit you’re looking for, and if you can afford the substantial premium payments, a limited pay life insurance policy may be a good idea for you.
Before making any decisions regarding the type of policy you need, you should do some research to determine how much you would pay for alternative types of life insurance.
You can obtain quotes from multiple companies and compare them to discover which companies offer more affordable rates for whole life insurance options.
Be sure to use our free quote tool below to find and compare limited pay life insurance quotes with other types of life insurance to determine which rates might work best for you.
