Final answer:
Limited Pay Life insurance is a type of whole life policy with premiums paid over a limited period, after which no premiums are due but coverage remains for life. It combines a death benefit with an accumulating cash value. Insurance serves as a safety net through risk pooling and premium payments.
Step-by-step explanation:
The type of life insurance that covers an insured's whole life with level premiums paid over a limited time is known as Limited Pay Life insurance. This life insurance policy is structured so that all the premiums are paid over a specific period, after which no more premiums are due, but the coverage remains intact for the insured's entire life.
Cash-value (whole) life insurance not only provides a death benefit to beneficiaries but also serves as a financial account due to its accumulated cash value. The cash on hand at the insurance company, resulting from premiums and other sources can be loaned to policyholders or others with such loans attracting interest which must be repaid by the borrower.
Insurance fundamentally serves as a financial safety net that allows individuals and entities to mitigate significant negative financial impacts through the pooling of risks and regular payment of premiums. The insurance company uses these premiums to create a pool from which claims are paid out to members who experience the insured events.