Options on Buying Whole Life Insurance

There are several advantages to a single premium life insurance policy, and this makes it a desirable way to insure for many people, especially those with a family to make sure will be prepared in the event they pass on. For one, the death benefit can be passed on tax-free. This is perhaps the biggest benefit afforded by the policy. In addition, this benefit will go to an individual’s heirs without having to go through probate, which provides a huge advantage to those with larger estates.

You also don’t have any worries that the policy will lapse because a single premium payment is made, so there is no need to worry about late payments. The coverage also offers faster access to the policy amount. This could be crucial in cases where the policy owner needs money to cover long-term care costs or other large expenditures. As an example, if the policyholder is suffering from a terminal illness it will often allow access to a portion of the death benefit.

Taxation on single premium whole life

Beneficiaries will receive all proceeds tax-free, however if the cash value is withdrawn, or a loan is made against the policy, the earnings portion of the policy amount will be subject to taxes. Certain situations and circumstances where a single premium life insurance policy can really be an advantage is when the individual is below 55 years old and has a 30-year working horizon. The time frame allows the policy enough time to allow the cash-value to grow.

For seniors 50 and older, looking to maximize available benefits when transferring their wealth, the policy will allow them to set aside a large amount of money for their heirs, or if you have heirs who will need a lifetime of income as in the case of special-needs children or grandchildren, heirs who may need a lifetime of income upon your passing.

Certainly you may have questions about the policy and may want to compare different policies and the benefits of one type of whole life policy over another. These questions are best handled by an agent familiar with this insurance sector.