Final answer:
20-pay life is a common limited pay whole life insurance option, where the insured person pays premiums for 20 years and the policy remains active for their entire life without further payments. It provides a death benefit to the beneficiaries upon the insured person's death.
Step-by-step explanation:
20-pay life is one of the common limited pay whole life insurance options. With this type of policy, the insured person pays premiums for a set period of 20 years, after which the policy remains in force for the rest of their life without any further premium payments. This means that the policy will continue to provide a death benefit to the beneficiaries upon the insured person's death.
For example, let's say John purchases a 20-pay life insurance policy when he is 30 years old. He pays premiums for 20 years until he is 50, and then he no longer has to make any payments. As long as John remains alive, the policy will stay active, and upon his death, the beneficiaries will receive the death benefit.
It's important to note that the premiums for 20-pay life insurance are higher compared to whole life insurance with a longer payment period, such as 30-pay or life pay. However, this type of policy allows the insured person to have the peace of mind of knowing that they will not have to make premium payments for the rest of their life after the initial 20 years.