Single Premium Whole Life Insurance
In this article, you will learn all about Single Premium Whole Life Insurance. However, if you all want is a quote, contact us or leave a comment. In reality, our Top Whole Life Quoter doesn’t offer single premium whole life insurance yet.
What Is Single Premium Whole Life Insurance?
First of all, the primary purpose of Single Premium Whole Life Insurance (SPWL) is used to leave a legacy to your beneficiaries. It’s life insurance that lasts forever, and the death benefit is transferred tax-free to your beneficiaries. As the name states, you pay only one Premium (payment), and you will have guaranteed life insurance forever.
The main difference between using a whole life with other types of permanent insurance is that you will have guarantees with it.
The advantages of a single premium whole life insurance for a legacy are:
1. Money Transfers Tax-free
Like all life insurance, your beneficiaries will not have to pay taxes on the death benefit.
2. The Death Benefit Grows
The death benefit grows significantly over your life span, so your beneficiaries will get more than what you deposited.
3. No Taxes As The Money Grows
You or your beneficiaries will not have to pay taxes on the growth of the cash or on the death benefit. For all other investments, you will have to pay capital gain tax or other taxes as it grows.
4. There Is Guaranteed Death Benefit
You can be confident that you will leave a legacy no matter what happens with the economy.
Who Should Not Do A Single Premium Whole Life Insurance
The disadvantages of using a Single Premium Whole Life:
- Cash is tied for a period of time into the whole life if you need to withdraw it
- There is an underwriting process that you will have to go through
- If you withdraw money deposited, you may have to pay taxes on the growth.
TIP 1: Make sure that the money you are putting into the single Premium whole life will not be used, and its purpose is to be transferred to loved ones.
Example of Single Premium Whole Life:
A 65-Year-old Male wants to leave behind $25,000 to his heirs. With a Single Premium Whole Life Insurance, he would get an initial death benefit of approximately $60,000 tax-free to the heirs. By the time they are 90, the death benefit will grow to $85,000 tax-free.
As you can see, a single Premium whole life is a great way to transfer money tax-free to heirs, and you can do it without paying taxes as the money grows.
What is the process to get a Single Premium Whole Life?
The process is just like getting a regular whole life policy:
- First of all, you need to know how much cash you want to deposit that will be transferred to your heirs.
- Then get a quote with the top whole life insurance with us.
- After you have determined the best company, you will need to get approved for the life insurance. This means taking a medical test which consists of having a nurse go to you to take blood and urine.
- The life insurance company will review your medical history to determine a rating. The better health you have, the more death benefit you will get. This process will take 6-8 weeks.
- After you are approved, you can transfer the money or pay by check.
- Finally, you have permanent life insurance to transfer money to your heirs.
What If I Want To Take My Money Out Of The Whole Life?
While you shouldn’t start this plan with the intention of taking the money you deposited out of your whole life, if you have an emergency and you need the money, you will be able to access it. However, your death benefit will be reduced, and you have to be careful not to lapse the policy.
How is Single Premium Whole Life Insurance used?
While SPWL is not used all the time in planning, there are some cases where it can enhance your wealth transfer strategy significantly. These are the most common uses of Single Premium Whole Life:
Tax-Free Transfer of Wealth
You want to make sure that a portion of your assets is passed on to your beneficiaries in a tax-free manner.
Estate Taxes
Also, a great way to minimize estate taxes is to use a single Premium whole life. If properly structured, the money can be removed from your estate. Be sure to speak to an estate tax attorney about your particular situation before making any decisions.
One Premium And you Are Done
Maybe you want to protect your family with a one-time payment and be done with it. A common reason is that you came into some money through inheritance or selling a business.
Final Word
Finally, we hope this helps you understand a single premium whole life insurance. As you can see, SPWL can be a great portion of your portfolio if properly used.
In addition, here are a few companies that have interesting Single Premium Whole Life:
- Sagicor
- Foresters
- MassMutual
If you would like quotes from any of the previous three, or from any other company, please reach out. All of the previous numbers can change based on your age and health. Contact us for an individual quote at: quotes@topwholelife.com
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