Often, those in the market looking to buy insurance may opt for a single premium life insurance policy. Why, you might ask? Well, as compared to a traditional or a whole life insurance policy where you pay insurance premiums at periodic intervals, this allows for a onetime payment solution for those who do not wish to have to make periodic payments over time.
Once the single premium payment has been made, you now become the owner of this policy containing a specific death benefit. You will not have to worry about making any further payments or be concerned with a lapse of your policy in case you forget to make any scheduled payments. Most major insurers provide single premium life insurance policies for the benefit of their customers and you can use the assistance of an agent to help you find out which avenue may work best for you.
Other advantages to a single premium policy
As the policyholder, you can obtain loans against your policy once the cash value reaches a certain pre-determined amount. You can also take a policy loan out at little or no cost, since your insurer can use income on funds invested to offset the interest charged to you as a borrower.
If you happen to have a significant amount of cash to invest or heirs you want to make sure will be well taken care of, compare single-premium life to investing in an annuity. Keep in mind that under this policy your beneficiaries will receive the death benefit free of income taxes. With an annuity, your beneficiaries must include any benefits in their taxable income.
There is still yet another option that might be available to you. If you have an older permanent life insurance policy that you no longer want to pay premiums on, instead of letting the policy lapse, thereby losing your cash value, you can likely roll your cash value amount into a single-premium life insurance policy.
Some single premium policies include long-term care benefits that allow you to withdraw the policy’s cash value without having to pay income taxes on it if you require long-term care services. Speak to your agent about the benefits of a single premium life insurance policy so you can make an informed decision on making this valuable purchase.