There are many kinds of life insurance policies available in the market to protect your dependents from any financial issues after your death. While some of these are everlasting, the others are temporary. Some have high coverage while others have low coverage. Though, unquestionably single premium life insurance is one of the best kinds of policy available in the market.
Some life insurance policies are just an accessory while others are a basic necessity. Anyhow, the purpose of any type of life insurance is to protect your loved ones from any future monetary hardships. As long as you’re alive, you struggle to safeguard your family but what will happen after your death?
That’s the real question, indeed that’s the actual purpose of life insurance. It addresses this question. Anyway, single premium life insurance is one of the best kinds of policy available in the market. So let’s read its pros and cons in detail in this blog.
- What is single-premium life insurance?
- Which are different types of Single Premium Life insurance and their investment options?
- What are the advantages of Single premium life insurance policy?
- What are the drawbacks of SPL?
- Which are the living benefits of SPL?
- What are good life insurance companies to buy a single premium life insurance policy?
What is single-premium life insurance?
It is also known as a “Prepaid life insurance policy”. It is the life insurance policy where the policyholder pays a single lump-sum huge premium at the time of contract signing. Consequently, this one giant premium fully funds the policy and your policy is in effect.
While you paid monthly, quarterly or annual premiums for all other life insurance policies; this one makes you safe from any other obligations. Thus, you do not have to pay any more premiums for your lifetime. So it is an extremely useful and safe life insurance policy.
This is practical for people who collected their job bonuses over time, or liquefied their real estate assets recently. Anyone who has a huge cash deposit in his bank or in the form of his estate. Moreover, the single-premium life insurance policy is aka prepaid life insurance. Which factors influence a prepaid life insurance policy? The factors that affect the SPL policy are: Age, gender, health, lifestyle, policy coverage, policy type, and smoking.
Which are different types of Single Premium Life insurance and their investment options?
SPL Whole life
If you paid with a single premium for a whole life policy, you will never have to pay a premium again. Your cash value will grow and build up with the fixed interest rate till you pass away. So, after your death, 100% guaranteed and tax-free huge lump-sum money is given to the beneficiaries to sort out all their future expenses. Therefore, this is the best single-premium whole life insurance policy for life.
SPL Universal life
The SPL policy is permanent and you are no longer required to pay premiums. Your policy is fully funded, sit back and enjoy the cash value built up according to the interest rate you and insurer agreed upon.
SPL IUL Indexed Universal Life
This form of SPL also relieves you from the stress of paying premiums any more. The cash value amount is invested in the S&P 500 stock index. Furthermore, it is protected with floors and caps. After your death a guaranteed death benefit is given to your loved ones.
SPL VUL Variable Universal Life
How Much Does Life Isurance Cost?
You do not need to pay more premiums, the cash value is invested in stocks, shares, mutual bonds, equities and other investment instruments for build-up and growth.
What are the advantages of Single premium life insurance policy?
- SPL policy is already fully funded.
- You do not have to pay any more premiums.
- It builds cash value with time.
- Your dependents receive tax-free death benefit payout.
- Cash value is usable for living benefits during any terminal illness.
What are the drawbacks of SPL?
- It is not practically affordable for all people, the least payable SPL premium is $5000-$10,000.
- You cannot increase your coverage ever!
- It is considered an MEC Modified Endowment Contract by the IRS, so any loan withdrawal before 59 and a half years’ age has 10% income tax applicable on it.
Which are the living benefits of SPL?
- Long-term care rider: This ensures that after a certain old age, the SPL policy will account for your payments for nursing home, old care home, or your house medical expenses for you and your wife. Obviously, it is necessary for old age.
- Chronic illness benefit: This rider makes sure that if you’re diagnosed with any serious chronic illness at any time in life, you make payments for medical expenses. Again you are able to cover for the serious medical condition with this SPL policy.
- Terminal illness benefit: If God forbid, you’re diagnosed with any fatal illness and have less than the life expectancy of one year. This rider facilitates you to pay for your medical, hospitalization charges and treatment till your death.
What are good life insurance companies to buy a single premium life insurance policy?
These three are offering popular single premium life insurance policies to people in the US.
- New York Life
- State Farm
- Pacific Life
Get SPL Policy quotes from Insure Guardian today!
Expert Life Insurance Agent and health insurance agent
Dylan is your go-to guy for life and health insurance at InsureGuardian. He’s helped over 2,500 clients just like you figure out the best insurance plans for their needs. Before joining us, Dylan was sharing his expertise on TV with Global News and making a difference with various charities focused on health. He’s not just about selling insurance; he’s passionate about making sure you’re covered for whatever life throws your way.