The Correct Answer and Explanation is:
The correct answer is 30 Pay Life.
This policy is the most appropriate choice for N because it precisely meets all the conditions specified in the scenario. A thorough analysis of N’s needs reveals why this option is superior to the others.
First, N requires permanent protection. A 30 Pay Life policy is a form of Limited Pay Whole Life insurance. By its very nature, whole life insurance provides a death benefit that is guaranteed to be paid regardless of when the insured passes away, as long as the policy is in force. This fulfills the crucial requirement for lifelong, permanent coverage, ensuring his beneficiaries are protected well after he retires.
Second, the request is for level premiums. A key feature of traditional whole life policies, including limited pay variations like this one, is a fixed premium schedule. The premium amount is calculated at the start of the policy and remains constant throughout the entire payment period. This provides N with the financial predictability he seeks, without worrying about future cost increases.
The third and most specific requirement is for the policy to be paid up at retirement. N is 40 and plans to retire at 70. A 30 Pay Life policy requires premium payments for exactly 30 years. The timeline aligns perfectly: N will make his final payment at age 70 (current age 40 + 30 years of payments). After this point, the policy is fully paid up. He owes no more premiums, yet the full death benefit remains active for the rest of his life.
In contrast, the other options fall short. Term to Age 70 insurance would terminate exactly when he needs continued protection, failing the permanent coverage goal. Universal Life and Adjustable Life are defined by their flexible premiums and benefits, which is contrary to N’s desire for a fixed, level structure and a guaranteed paid up date.
