Most people pay for insurance every month. Some people pay quarterly, semi-annually or yearly. If you choose to buy a single-premium life insurance policy, then you usually pay one large premium at the time you enroll in coverage. After that, you don't have to pay again.
To some people, paying a single large premium isn't worth the cost. Why do others consider buying single premium life insurance?
Three Reasons to Consider Single Premium Life Insurance
These are some benefits of single premium life insurance.
1. Full Funding From the Start
The cash account of your policy will often grow quickly because you funded the policy from the first day of enrollment. You do pay a larger premium in the beginning. However, you can often still qualify to spend less money to buy more coverage if you prepay. You may get a bigger cash value account and death benefit with single premium life insurance.
2. Living Benefits
People mainly buy life insurance to make sure they can give their heirs cash after they die. The cash account of a permanent policy may also give the policy owner tax advantages and access to cash if they need it when they are still alive. You may be able to use single premium life care to help pay for nursing care, medical bills or even living expenses.
3. Defer Taxes on Growth
Many people buy permanent life insurance because of its tax advantages. You may have to pay taxes on interest you get from a regular savings account. However, in many cases you can defer the taxes on growth for the cash value of your life insurance policy. This allows your money to grow faster. Your heirs also won't need to pay taxes on the death benefit after you die.
Single Premium Life Insurance Disadvantages
The main problem with getting a single premium life policy is that you need a large sum of cash to begin your policy. Many companies ask for at least $5,000 to start your coverage. You may also need to be healthy enough to pass underwriting medical exams. Relatively healthy people should get accepted at a standard or better rate. Some health conditions may cause you to pay more for coverage or even get declined for coverage, however. All the same, it’s entirely possible to get quality life insurance benefits even with a pre-existing condition.
When to Consider Single Premium Life Insurance
Consider single premium life insurance if you have cash that you hope to pass to your heirs or don't plan to use for several years. You can also consider buying this product to give a child or grandchild the gift of lifetime protection.
For more information on determining the coverage you need, contact one of our agents today. We will help you find the right life insurance for your family.