Which of the following Whole Life insurance policies has the highest annual premium payment per $1,000 of coverage for a 35-year-old?

The choice of the 20-Pay Ordinary Whole Life policy being associated with the highest annual premium payment per $1,000 of coverage for a 35-year-old stems from the nature of premium payments and the structure of whole life insurance policies.

In a 20-Pay Ordinary Whole Life policy, the premiums are condensed into a shorter period of time—specifically, 20 years—compared to policies with longer payment terms. Because the same amount of coverage is funded over a shorter span, this results in higher annual premiums. Insurers calculate premiums based on the time value of money, mortality rates, and the cost of providing the benefits, which means that less time to collect premiums will lead to increased annual payments.

In contrast, the 30-Pay and 40-Pay Ordinary Whole Life policies spread the premiums over a longer duration. Consequently, the annual premium payments in these policies are lower since they are designed to be paid over a longer timeframe, allowing for the same amount of coverage to be financed more gradually.

The Whole Life with Extended Payment option also tends to have lower annual premiums because the payment period is extended beyond the typical whole life payment terms, which further decreases the annual premium amounts compared to a 20-Pay