Types of Single Premium Life Insurance – Two Options for Investing Your Money
Types of Single Premium Life Insurance Two Options for Investing Your Money
If you can leave your family a substantial amount of money once you have passed on, you will guarantee their comfort and benefit from great peace of mind during your remaining years alive. There are many different kinds of life insurance, which can become complicated for customers trying to find the best option for them. Single premiums life insurance is one option under the broad category of whole life insurance. If you do not like the idea of paying monthly premiums, you can choose single premium life insurance instead. As you might imagine from the name, you choose a single lump sum to put into your policy and guarantee death benefits for your beneficiaries.
Under the single premium life insurance option, there are two types of policies that you can look into. These vary because they offer different investment options. The first choice is a single premium whole life insurance policy. The money you invest in your policy will earn a fixed interest rate over the length of time it is in the account. This rate is determined by current economic conditions and the company's investing experience. The second choice is called a single premium variable life insurance policy. You, the policy holder, will select from a list of stocks, bonds, and money market subaccounts to choose where you want your money invested in.
The type of single premium life insurance policy you choose will depend on your ability to invest money, the framework of your other assets, and how you will be using the cash value from your policy. A fixed interest rate is obviously safer and more stable. However, by taking a risk in a variable option, you could experience great gains in the long run. Fortunately, your investment will never be completely wasted because there is a minimum death benefit set up when you purchase your policy.
With either type of single premium life insurance policy, the minimum amount you can invest is usually $5,000. This can make the single premium option a cost-prohibitive choice. Additions are not allowed, and you should only use money to buy this kind of policy that you had intended to pass on to your heirs anyway. Remember, like other life insurance options, you will need to meet minimum underwriting requirements to quality for single premium life insurance. Simply put, if you have a lump sum that you want to put to good use, this is a perfect option
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