Should You buy Single Premium Life Insurance?

Benefits of purchasing a single premium life insurance policy:


Minimal underwriting (good choice for the elderly)
Can provide funds for emergencies
Interest can accumulate tax deferred
Compensate for estate taxes
May have a rider where you can borrow cash if you are confined to a nursing home
May allow you to take become terminally ill
Guaranteed (by the insurance company) cash value account
Payable directly to your named beneficiary

Drawbacks of paying a lump sum (single premium) life insurance policy:

The company is getting all your money up front, and you may be dissatisfied
Borrowing from your cash value may cause tax problems
There are restrictions on a minors receiving the death benefit
If a charity is named as beneficiary, the benefit may be taxable
Tax issues may result if single premium polices are deemed a gift

Single premium life insurance buying tips:

Get more than one quote
Consider the company's financial strength, because they are getting your money up front
Get several copies of your policy give it to the beneficiary
Make sure the policy allows you to add more death benefit to the same policy

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