Limited-Payment Life Insurance Law and Legal Definition

Limited-payment life insurance refers to a life insurance policy with a limited number of higher payments by eliminating the life-long payments of the past. A policy holder pays a premium for a predetermined number of years and holds the policy for the rest of life. For example, a twenty payment limited life insurance policy would literally be paid in full after twenty payments.

The following is a state statute enabling the issuance of limited-payment life insurance policies. “Any corporation, company or association transacting business may issue limited payment or any form of investment policies; provided, that the premiums shall not be less than the net term rate for the kind of policy issued, increased by such sum as will, improved at four percent, equal the net single premium for the attained age, at the end of the paying term of the policy, according to the actuaries' or combined experience table of mortality on which its calculations are based." [§ 377.270 R.S.Mo.]