Investing in Your Familys Future
Single premium life insurance refers to a policy in which a lump sum of money is paid into the policy in exchange for a guaranteed death benefit that will remain paid-up until the death of the named insured. The main benefit of life insurance is to leverage funds to create an estate that can provide for surviving family members or to be left to some charitable cause.
There are different versions of this type of policy available that can offer a wide range of investment options and withdrawal provisions. With a single premium life (SPL) insurance policy, the cash invested builds up quickly because the policy is fully funded. The size of the death benefit is determined by the amount that has been invested and the age and health of the insured individual.
Two popular single-premium policies currently being marketed offer slightly different investment options. The first is single-premium whole life coverage that pays a fixed interest rate based on the insurance company’s investment experience and current economic conditions. The other one is called single-premium variable life and it allows policy owners to select from a menu of professionally managed stock, bond and money market sub-accounts, as well as a fixed account.
The choice you make could very well depend on your ability to deal with market changes, the makeup of any other assets in your portfolio, and how you intend to use the policy’s cash value. With a fixed interest rate, you can depend on the stability of the constant growth rate in your policy, but you will also miss out on potential gains if the financial markets wind up having a good run. The minimum death benefit is established when you purchase the policy, but if the policy’s account value grows beyond a certain amount then the death benefit will usually go up as well.
If you want to have guaranteed insurance protection for your family, or as a means to begin a child’s life insurance program, or perhaps you want to leave something to your favorite charity, single premium life insurance may be the ideal product for you.