Characteristics of Single Premium Life Insurance – Know Your Options
Characteristics of Single Premium Life Insurance Know Your Options
As you know, the main reason to obtain life insurance is to be able to provide for your family should you pass away. There are several different kinds of life insurance policies, all of which are designed slightly differently to meet all kinds of customers' needs. One of these is called single premium life insurance. As the name suggests, you pay a single lump sum of money in return for a death benefit that will apply once you have died. If this sounds like it could be interesting to you, you should educate yourself on the details of this kind life insurance policy to make sure it is right for you.
Because the policy is fully-funded, the cash you put into your policy with build up quickly. The amount of death benefits that you are granted depends on your age and current health when you put the money in to the policy. It is clear that, in the eyes of the insurance company, you have a longer life expectancy if you are a younger person opening a single premium life insurance policy. This will give your money more time to grow and therefore provide your family with more benefits when you pass away.
Naturally, the more money you put into your policy, the greater your potential death benefit will be. For instance, a 65-year-old woman puts a single premium payment of $30,000 into a policy and receives a $60,000 income-tax free death benefit for her family. On the other hand, a 45-year-old man pays a single premium of $90,000 and his death benefit could become $350,000 or more. These amounts are significant, but keep in mind that unexpected expenses can arise before you pass away. For example, if you go into long-term care, the costs could add up quickly. Fortunately, you have access to the tax-free death benefit money to help pay for long-term care costs.
Some single premium life insurance policies feature a characteristic that allow you to withdraw part of the death benefit funds if you have a terminal illness and a life expectancy of one year or less. In this way, you and your family can utilize the funds before you pass on to make your remaining months more comfortable or to prevent unexpected costs from getting out of hand. Clearly, the beneficial characteristics of single premium life insurance certainly might be able to convince you that this is the best life insurance option for you.
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