Questions: A PRIMARY advantage of a limited payment policy over a continuous premium whole life policy is that a limited payment policy A. is a nonparticipating contract paying higher dividends than a continuous pay policy. B. guarantees renewability. C. includes nontaxable dividends. D. allows the policyowner to pay for the entire policy in a shorter period of time.

The answer is D: allows the policyowner to pay for the entire policy in a shorter period of time.

Explanation for each option:

A. is a nonparticipating contract paying higher dividends than a continuous pay policy.

• This option is incorrect. Limited payment policies are not necessarily nonparticipating, and they do not inherently pay higher dividends than continuous pay policies. Dividends depend on the specific terms of the policy and the performance of the insurance company.

B. guarantees renewability.

• This option is incorrect. Renewability is typically a feature of term life insurance policies, not whole life policies. Whole life policies, including limited payment policies, are generally permanent and do not require renewal.

C. includes nontaxable dividends.

• This option is incorrect. While some whole life policies may pay dividends, these dividends are not guaranteed and can be taxable depending on how they are used. The tax status of dividends is not a primary advantage of limited payment policies over continuous premium policies.

D. allows the policyowner to pay for the entire policy in a shorter period of time.

• This option is correct. A primary advantage of a limited payment policy is that it allows the policyowner to pay off the policy in a shorter period, such as 10, 20, or 30 years, or by a certain age, while still providing lifetime coverage. This can be beneficial for those who want to have their premiums paid off before retirement or another financial milestone.