Peace of Mind for a Lifetime

Single Premium plans

GUARANTEED FINANCIAL LEGACY

Single Premium Life Insurance Plans are designed as permanent policies that, based on selection, may or may not have cash values.
Since they cover the insured till the age of 100 and sometimes beyond, there is an inherent guarantee that at one point in time the life insurance proceeds will surely reach the intended beneficiary.

SINGLE PREMIUM ANNUITIES

Creates a lifetime of income.
Income periods can be custom-designed.
It is a safer retirement income plan.
Single Premium Immediate Annuity (SPIA), and Multi-year Guaranteed Annuity carry the lowest administrative fee due to their simplicity.

LIFE INSURANCE AS FOUNDATION

No financial planning is complete without a properly structured life insurance policy.
Generally, the premiums depend upon the insured’s age, health, the amount of coverage, the length of time and the activities that cause risk to life. Most plans are subject to underwriting, age and state availability.

What is Single Premium Life Insurance?

PAY ONCE TO COVER A LIFETIME

Single premium life insurance is a fully-funded life insurance policy. No monthly or annual premiums. Pay once to cover a lifetime.

One lump sum payment is paid into the policy to create a guaranteed lifetime death benefit that remains level at all times and may maintain an increasing cash value along with an increasing death benefit if it is a whole life or an index universal life insurance plan.

The amount of coverage one can qualify for depends on the amount of initial contribution, your age, your health, and lifestyle.

Various types of Single Premium Life Insurance Policies

Let’s look at an example. If a non-smoker male in perfect health at age 50 contributes $163,295 into a Single Premium Whole Life Insurance plan with cash values, his immediate coverage could be as much as $500,000 in death benefit.

That is an instant gain of $330,000. If he dies the next day or any time till the age of 121, his beneficiary will receive a total of $500,000 generally income-tax-free, if structured properly.

The policy also gains deferred cash values with time. If at the same time you decide to pay annually for this $500,000 whole life policy, you will end up paying $400,000 over a period of fifty years for the same amount of coverage. So, by paying a single premium for a $500,000 policy there is a substantial saving of $236,705!

A female can get the same coverage for a single premium of $146,685.

Now, if a male at age 50 doesn’t care for cash values and takes Guaranteed Universal Life (GUL) Insurance instead of a Whole Life, he will contribute only $118,911 for a $500,000 death benefit. He will pay less but will have the same amount of guaranteed coverage until the age of 121. That’s how simple it is!

Women usually get more for less. It is mainly due to the mortality factor. They tend to live longer than men. A perfectly healthy female at age 50 can get a $500,000 of death benefit in a single premium guaranteed universal life plan for only $101,605.

Simply speaking, the best single premium life insurance is the one that offers you the most coverage for a single payment and covers you for an entire lifetime. This may work differently for those looking for long term care rider on the policy.

1. Single Premium Whole Life – (SPWL)
  This type of insurance can be attractive to those who have a large sum of funds available that they wish to, for the better word, invest in a low-risk, guaranteed-return product while also providing life insurance coverage for their beneficiaries.
  Whole life insurance policies almost always need careful custom-designing based on client’s needs.
2. Single Premium Guaranteed Universal Life (GUL)
  GUL policies do not accumulate cash as they go. As a result, single premium universal life plans cost less than whole life or cash value plans. The target is to have a guaranteed lifetime of coverage and receive the maximum face amount in death benefit that the money can buy.
3. Single Premium Universal Life with Index Option (IUL)
  These plans allow risk-free participation and allow you to choose from different indexes to determine the interest rate on your policy. . So, the dividends are index-based and not guaranteed. However, usually these universal life policies do come with a cap on guaranteed interest rate. The growth is tax-deferred and the death benefit is income-tax free.
  The bottom line is that IUL policies can be a good option for those looking for flexibility, tax-deferred growth, and death benefit protection.
4. Single Premium Term Life Insurance
  Only a handful of the insurance companies offer an option to pay a lump sum single premium to buy a term life insurance plan. By doing so, the insured ends up with substantial premium savings.
  For example, if a 40-year old male in good health can get a 30-year term life insurance for an annual premium of $980. The cumulative premium of 30 years will be 29,400. If instead of paying annually, he chooses to pay a single advance premium of $19,784.70, he will end up saving $9,615.30.
  Here are a few facts about comparison between term and single premium life insurance. If you are interested, please give us a call at 1.866.526.7264.
5. Single Premium Variable Life (VUL)
  With a VUL policy, the policyholder makes a one-time, lump-sum payment to the insurance company, which is then invested in the policy’s underlying investment options. The cash value of the policy can grow or decline depending on the performance of the underlying investments. The policyholder may have the option to adjust their investment strategy over time to better align with their financial goals and risk tolerance.

Tax Treatment of a Single Premium Life Insurance Policy

The single premium contribution that you put in this plan grows tax-deferred. You will only pay tax on the gain if you decide to withdraw or borrow from the policy. However, there could also be an IRS penalty as these policies are usually considered Modified Endowment Contracts, and can cause tax implications. Just so you know that a single premium whole life plan can be structured as non-MEC. Please keep in mind that the death proceed of a life insurance plan, if structured properly, is always federal income tax-free.

Single Premium Life Insurance Rates for a 40-year Old Male in Preferred Best Risk Class Health

Policy Type	Lifetime Coverage	Lump-sum Single Premium	Premium, if paid annually
Guaranteed Universal Life (no cash values)	$1,000,000	$158,179	$6,770
Whole Life (with cash values)	$1,000,000	$309,972	$15,070
Please note that all quotes are subject to underwriting and state availability. These numbers should work only as a reference.

Single Premium Life Insurance Rates for a 40-year Old Female in Preferred Best Risk Class Health

Policy Type	Lifetime Coverage	Lump-sum Single Premium	Premium, if paid annually
Guaranteed Universal Life (no cash values)	$1,000,000	$145,930	$5,410
Whole Life (with cash values)	$1,000,000	$280,972	$13,260
Please note that all quotes are subject to underwriting and state availability. These numbers should work only as a reference.

Is Buying Single-Premium Life Insurance a Good Idea?

Whether purchasing a single-premium life insurance policy is a good idea depends on your individual needs, goals, and financial situation.

One of the advantages of a single-premium life insurance policy is that it provides immediate death benefit coverage with just one lump sum payment, which can be a good option for those who want to ensure that their loved ones are protected in the event of their unexpected passing. Additionally, because a single payment funds the policy, there are no required future premium payments, which can be a convenient option for those who don’t want to deal with the hassle of monthly or annual payments.

However, there are also potential drawbacks to consider. One of the main disadvantages of a single-premium life insurance policy is that the upfront cost can be quite high, as the entire premium payment is due at the time of purchase. This can make it an expensive option for those who don’t have a large sum of money readily available.

Additionally, in a cash value single premium life insurance policy, because the cash value accumulation is funded with a single payment, the policy’s investment returns may not be as high as those of other types of life insurance policies that allow for ongoing premium payments and ongoing cash value accumulation.

The bottomline is that it’s important to carefully consider the costs, benefits, and potential drawbacks of this type of policy, and to work with a financial advisor or insurance professional to determine whether it’s the right option for you.

The Bottomline

From covering the cost of a decent burial to leaving a financial legacy, and protecting your estate from inheritance tax, single premium life insurance is an effective and a powerful solution for creating an immediate estate through guaranteed lifetime death benefit that you cannot outlive. Click here for your real time life insurance rates.

These quotes do not include whole life insurance because those plans need to be discreetly custom-designed based on the client’s requirements. We encourage you to call us if you are planning a cash value whole life insurance plan. Call 1.866.526.7264.

Best Single Premium Life Insurance Companies in 2023

A number of major life insurance companies offer permanent life insurance single premium plans that have a single or limited premium options. Penn Mutual, Mass Mutual, AIG, Pacific Life, Lincoln Financial, Prudential Financial, and North American, are a few of the premier companies in the market.

Here is a list of the five best whole life insurance companies of 2023.

What are the Benefits of Life Insurance?

3 Reasons Why Single Premium Life Insurance can Work for you.

SCENARIO ONE – COVERING ESTATE TAX

No matter who takes over Washington DC, the estate taxes are not going anywhere. They can be less or more, but they will be there for sure.

SCENARIO TWO – CREATING AN IMMEDIATE FINANCIAL LEGACY

No other financial product creates an immediate estate the way a properly designed life insurance policy does. Unlike other gains, the death benefit is federal income-tax free.

SCENARIO THREE – LIVING BENEFITS RIDERS

Many a times, in order receive certain benefits from your life insurance policy, you don't need to die. Certain free and optional riders can do the job for you.

Estate Tax can be a Disaster

To make sure that when the time comes Alex should have that much cash to pay Uncle Sam, she purchased a single premium life insurance plan, which as a fully-funded life insurance policy covered her for the rest of her life (until age 100). Since the ladies in her family did not live beyond age 85, she knew the permanent life insurance she just took would do its job.

Elizabeth got approved by an A+ rated carrier at a Standard risk and paid only $2,275,160 to receive a single premium universal life insurance policy of $5,000,000. Now, that was a substantial gain. The best part was the death benefit would go to the beneficiary federal income tax-free!

This would allow Alex to continue his family’s legacy without going through financial hardship upon the death of his last parent.

Anyone who is subject to estate tax or death tax will find single pay life insurance extremely useful.

One of my clients, Elizabeth, age 72, with a net worth of a little over $12M had a comfortable life with substantial income coming from various sources. Her son, Alex, the only child by her late husband, was a brilliant young man who took over the family business upon father’s death and kept it running successfully. Most of the family’s assets were tied up in the family business or other investments.

Upon her demise, Elizabeth’s estate would trigger an estate tax in the range of $5M.

Scenario 2 – Single Premium Plan creates Immediate Legacy

Life Insurance Creates a Financial Legacy

Bill at 56 invested a lump sum of $229,475 in a single premium whole life insurance policy, which got him lifetime coverage (till age 120) of $500,000. This was a cash value policy, fully-funded and never to lapse. We could easily get him the same coverage for less if he did not want cash values. Now, if Bill died one minute after paying his single and final premium, or 63 years 364 days later, the plan would offer his beneficiary an federal income tax-free death benefit of $500,000.

These plans can work great for children also.

A 10 years old male child can get $200,000 worth of single premium whole life insurance with cash values for only $19,126; and a single premium universal life insurance for only $12,209.50.

A 10 years old female child can get the same $200,000 coverage for $16,592 and 10,490.50 respectively.

Usually, a parent can buy only half the death benefit of a child compared to his or her own policy. But that is also a matter of context in which a large life insurance policy is purchased on a child, who, for example, if you know will go to college and will most probably borrow loans for education, a $200,000 policy does not sound high. If the unthinkable happens to the child during college, the income-tax-free life insurance proceeds will allow you to take care of loans and other financial burdens.

Not only that, since beneficiaries on a life insurance policy can be changed anytime, in future the spouse can be benefitted because of the presence of a life insurance plan that will continue covering the insured.

Please keep in mind that single premium whole life insurance plans come as participating and non-participating. If you want cash accumulation, non-participating is not a good option.

Scenario 3 - Single Premium Life Insurance with living Benefits

Use Your Policy Funds While You are Alive

Most insurance carriers offering single premium life insurance plans also offer certain riders to go along with them. These riders add specific value to your plan and can be useful to the insured while living.

1. Accelerated Benefits Rider (ABR)

In some states, a life insurance policy may include Accelerated Benefits Rider at no additional cost. This Rider provides the option to accelerate a portion of policy proceeds if the insured is terminally ill with a life expectancy of 12 months or less.

2. Long-Term Care Rider

This rider provides a financial cushion for the family if and when the need for Long Term Care arrives. By opting for this rider, whenever available, the insured ends up receiving a combination benefit of life insurance and Long Term Care insurance in a single policy. It is definitely worth considering. Also remember, the benefits come to you tax-free.

The story of Jody who never thought this could happen to her comes to mind. When she was struck by a paralyzing stroke at the age of 67, the world around her became dense and dark. This Long Term Care Rider came to her rescue and saved her from spending her life savings in annuities, Roth IRA, and other investments. Long story short, she escaped from becoming bankrupt due to a decision she could afford to make when purchasing her life insurance policy about 9 years back. We are glad that we could persuade her to consider the LTC rider.

An insurance company may decide to come up with some other useful rider in future. It is always a good idea to talk about available riders when purchasing a single premium life insurance policy.

3. Chronic Illness Accelerated Rider

This rider enables the policy owner to access a portion of the policy death benefit as an Accelerated Benefit Payment (ABP) if the insured becomes chronically ill.

This benefit is automatically included with eligible policies. Issue of this rider is subject to underwriting approval.
There is no charge for this rider, but there is an impact to the death benefit and cash value when it is used.
The insured must be at least 20 years old.
A licensed health care practitioner, not related to the insured or policy owner,
must provide a certification prepared within the last 12 months that the insured is unable to perform two of the six Activities of Daily Living or suffers from a severe cognitive impairment for a period of at least 90 days. The licensed health care practitioner must also certify that the continuous care in an eligible facility or at home is expected to be required for the remainder of the insured’s life when the insured has a Chronic Illness.
The Chronic Illness Accelerated Benefit Rider is a life insurance benefit that also gives you the option to accelerate some of the death benefit in the event that the Insured meets the criteria for a qualifying event described in the policy. This rider does not provide long-term care insurance subject to California long-term care insurance law. This rider is not a California Partnership for Long-Term Care program policy. This rider is not a Medicare supplement policy.
(Source: Penn Mutual)

FREQUENTLY ASKED QUESTIONS (FAQ)

Is a single premium life insurance policy a good investment?

Whether a single premium life insurance policy is a good investment depends on individual circumstances and financial goals. It is important to consider factors such as the upfront cost, potential returns, and the level of risk associated with the investment.

One thing is for sure that it costs much less to purchase a single premium life insurance policy.

What is the buy term, invest the difference?

“Buy term and invest the difference” is a popular financial strategy that suggests buying term life insurance, which is typically less expensive than permanent life insurance, and investing the difference in cost into other investment vehicles like mutual funds or retirement accounts.

The basic idea behind this strategy is that term life insurance provides coverage for a set period, usually 10, 20, or 30 years, during which time you can use the money saved by not purchasing more expensive permanent life insurance to invest in other opportunities that can provide higher returns over the long term.

While this strategy can work for some people, it is not always the best choice for everyone. There are a few things to consider when deciding whether to use the “buy term and invest the difference” strategy:

The amount of life insurance coverage you need: If you need a large amount of coverage, term life insurance may be more affordable in the short term, but the cost of premiums may increase significantly as you get older.
Your investment knowledge and risk tolerance: To make this strategy work, you need to be able to invest the difference in a way that provides higher returns than permanent life insurance would. If you are not comfortable with investing, or if you have a low risk tolerance, this strategy may not be right for you.
Your overall financial goals and needs: This strategy may be a good fit if you have a long-term investment horizon and can afford to take on more risk. However, if you have more immediate financial needs, such as paying off debt or saving for a down payment on a house, you may need to focus on those goals before investing in the market.

Ultimately, the decision to “buy term and invest the difference” will depend on your individual circumstances and financial goals.

Can I convert term life insurance to a whole life?

Yes, many term life insurance policies allow for the option to convert to a whole life insurance policy. The conversion feature typically allows the policyholder to convert their term life insurance policy to a permanent life insurance policy, such as whole life or universal life insurance, without the need for a medical exam or providing proof of insurability.

The conversion option is typically available during a specific period of time, known as the conversion period, which is specified in the policy. This period is usually within the first few years of the policy, but it can vary depending on the insurance company and policy terms.

It’s important to note that the premiums for a whole life insurance policy will be higher than the premiums for a term life insurance policy.

How much life insurance do I need?

The amount of life insurance you need depends on a variety of factors, including your income, expenses, debts, and financial goals. Here are some general guidelines to help you determine how much life insurance you need:

Calculate your current expenses: Start by adding up all of your current monthly expenses, including your mortgage or rent, utilities, food, transportation, and other bills. Multiply this total by 12 to get your annual expenses.
Consider your future expenses: If you have children, you may need to account for future expenses like college tuition or childcare costs. You should also consider any outstanding debts you have, such as student loans or credit card debt.
Determine your income replacement needs: A common rule of thumb is to purchase life insurance coverage equal to 10-12 times your annual income. This will provide a cushion for your loved ones to replace your income in case of your untimely death.
Think about your long-term financial goals: If you have specific long-term financial goals, such as paying off your mortgage or providing for your spouse’s retirement, you may want to factor those into your life insurance coverage needs.
Consider any existing life insurance coverage: If you already have life insurance through your employer or a personal policy, you may need less additional coverage than if you have no coverage at all.

It’s important to note that everyone’s life insurance needs are different, and what works for one person may not be the best fit for another.

What are the pros and cons of Group Life Insurance through work?

Group life insurance is a type of life insurance coverage that is offered through an employer or other organization. Here are some pros and cons of group life insurance through work:

Pros:

Low cost: Group life insurance is often less expensive than individual life insurance policies because the risk is spread out among a large group of people.
Convenience: Since group life insurance is offered through your employer, it’s easy to enroll and manage your coverage.
No medical exam required: Many group life insurance policies do not require a medical exam, which can make it easier to obtain coverage, especially for those with pre-existing medical conditions.
Guaranteed issue: With group life insurance, you may be able to obtain coverage regardless of your health status, as coverage is typically guaranteed issue up to a certain amount.
Coverage amounts: Many employers offer a basic level of group life insurance coverage at no cost to employees, with the option to purchase additional coverage at a discounted rate.

Cons:

Limited coverage amounts: Group life insurance coverage amounts are often limited and may not be sufficient to meet your individual life insurance needs.
Limited control over coverage: With group life insurance, you may not have as much control over your coverage as you would with an individual life insurance policy.
Loss of coverage: If you leave your employer, you may lose your group life insurance coverage. Although some policies may allow you to convert to an individual policy, this can be more expensive.
Lack of customization: Group life insurance policies are generally not customizable to meet your specific needs.
No cash value: Group life insurance policies do not accumulate cash value like some types of individual life insurance policies.

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Which is the best life insurance?

A life insurance policy achieves several things:

It provides financial security for your loved ones: The death benefit can be used to cover expenses such as funeral costs, outstanding debts, and living expenses.
It can help fund future expenses: Some life insurance policies, such as whole life insurance, build cash value over time that can be used to help fund future expenses such as education, retirement, or long-term care.
It can help with estate planning: Life insurance can be used to help provide liquidity for estate taxes or to leave a legacy for future generations.
It can provide peace of mind: Knowing that your loved ones will be taken care of financially in the event of your death can provide peace of mind for both you and your family.

The best life insurance is the one that delivers the needed results for you and you loved ones.