Single premium life
Cash Value Policies: Single Premium Life
Description Premiums Cash Value Advantages Disadvantages Uses
Guaranteed at-death proceeds; Guaranteed lifetime benefits One-time payment of all premiums due for life of the policy Builds up faster than any other type of policy since policy is fully funded with payment of the sole premium Most highly investment-weighted policy; Earnings left in policy until insurer's death escape income tax Classified as a MEC: lifetime withdrawals and loans subject to income tax and may be subject to 10% penalty tax; One-time payment of premiums may be cost prohibitive Buyers needing insurance coverage but who want policy weighted to investments (only feasible if lifetime withdrawal will not be made); A preferred way for high-income owners to transfer income estate tax free