Final answer:
An example of a limited-pay life policy is Life Paid-Up at age 65, where premiums are paid until a specific age and the policy remains in effect thereafter without additional payments.
Step-by-step explanation:
An example of a limited-pay life policy is Life Paid-Up at age 65. It is a type of policy where you pay premiums for a certain period until you reach a specific age, like 65, after which no more premiums are due, and the policy remains in effect until death or policy maturity. Unlike level term or renewable term policies which do not accumulate cash value and simply provide coverage for a set term, or straight life which requires premium payment over the entire life of the policy, limited-pay policies are designed for the policy to be paid up before the insured reaches retirement age, often providing a cash value component which can be borrowed against or withdrawn.
When determining premiums and policy structures, life insurance companies use actuarial science and life tables. These tables incorporate mortality rates and life expectancy data to estimate how much premium should be charged to ensure the policy is financially viable for the insurance company while providing the agreed-upon death benefit to beneficiaries.