Lots of us are looking at our retirement planning, and we just wish we could be sure that we could leave more money to our kids or grand kids. We may have a lump sum of cash we could set aside, but wonder how it could grow so we can leave a nice cash estate behind us. A product called Single Premium Life Insurace may be a good option to consider.
SPLI differs from the type of life that you are used to in a couple of ways. The most obvious difference is that you fund it with a large payment at the beginning for the policy. With regular coverage, you make monthly, quarterly, or yearly payments over a period of years.
This sound simple, but it does make this product a little different than other types of coverage you may have purchased before. It is whole life insurance and that one payment can guarantee lifetime coverage. In addition, the amount of the face value you can buy will usually be much larger than the actual cash you put into it. So this may be a great option if you want to turn a smaller lump sum of money into a much larger inheritance.
Look at the example of a healthy 70 year old who retired from the public school system. Her savings and teachers pension enable her to live well. But she also has another $50,000 she inherited from her own parents. She could take this cash and fund an SPLI for, let us say, $200,000. This way she sets up a nice estate to pass on to her kids and grand kids.
The paragraph above is only meant to illustrate how this works. The amount of cash you would have, and the death benefit you could buy, depend upon different things. As with any other life insurance, your premium and coverage amount will depend upon age, health, etc.
Who should consider single premium life (SPL)? It is something to consider if you have a lump sum of cash that you would like to leave to your heirs. Your children, grandchildren, or a favorite charity could be the beneficiaries.
Be sure you will not have to use the money for a few years. In the first few years, policies can impose fees and surrender charges. So it is probably not the right life insurance if you are not sure if you will need the money to live on.
Another advantage to the owner is a SPL policy’s ability to grow a cash value quickly. If you can leave the money alone for the few years you will need to get past surrender charges, you can have a nice place to borrow money from. You can also cash the policy in. The cash value should grow quickly since the insurance is already funded by the initial payment!
Many policies also have accelerated death benefit provisions. If the insured person is terminally ill, some of the death benefit can be used to provide care while that person is alive. Some also have nursing home provisions, so this can be a good way of planning for that possible need without another long term care insurance policy.
There could be some disadvantages to single premium life insurance. Remember that early cash outs can incur surrender fees. You lose some of the tax advantages of regular life policies too. And of course, you do need to have a lump sum of cash to fund it.
Visit us - Best Insurance Website.