Most people pay for insurance every month. Some people pay quarterly, semi-annually, or yearly. You usually pay one large premium to start a single-premium life insurance policy. After that, you don't have to pay again.
To some people, paying a large premium isn't worth the cost. Why do others consider buying single premium life insurance?
Three Reasons to Consider Single Premium Life Insurance
These are some benefits of single premium life insurance.
1. Full Funding From the Start
The cash account of your policy will often grow quickly because you funded the policy from the first day. You do pay a larger premium in the beginning. However, you can still spend less money to buy more coverage if you prepay. You may get a bigger cash account and death benefit with single premium life insurance.
2. Living Benefits
People mainly buy life insurance to make sure they can give their heirs cash after they die. The cash account of a permanent policy may also give the policy owner tax advantages and access to cash if they need it when they are still alive. You may be able to use single premium life to help pay for nursing care, medical bills, or even living expenses.
3. Defer Taxes on Growth
You may have to pay taxes on interest you get from a regular savings account. You can defer the taxes on growth for the cash value of your life insurance policy. This allows your money to grow fast. Your heirs also won't need to pay taxes on the death benefit after you die. Many people buy permanent life insurance because of its tax advantages.
Single Premium Life Insurance Disadvantages
The main problem is that you need a large sum of cash to begin your policy. Many companies ask for at least $5,000 to start. You may also need to be healthy enough to pass underwriting. Some health conditions may cause you to pay more for coverage or even get declined. Relatively healthy people should get accepted at a standard or better rate.
When to Consider Single Premium Life Insurance
Consider single premium life insurance if you have cash that you hope to pass to your heirs or don't plan to use for several years. You can also consider buying this product to give a child or grandchild the gift of lifetime protection.
For more information on determining the coverage you need, contact one of our agents today. We will help you find the right Downington life insurance for your family.