Single premium life insurance or SPL plans
charge an up-front payment as a premium to fund the entire policy in one go. In
return, a death benefit is guaranteed to the policyholder's family or the
nominee. The prime benefit of a single premium plan is that a single premium payment funds
the entire policy. It has an immediate guarantee to offer sizable death
benefits to beneficiaries.
The following information offers an outlook of
the different SPL versions (investment options & withdrawal provisions)
available in the market.
An
Overview of Single Premium Life Insurance
As SPL policies are fully-funded, the invested
cash builds up at a quicker pace. The death benefit's cover depends on the
invested amount and the policyholder's health and age. An insurance company
considers a younger policyholder to calculate a longer life expectancy.
These funds have more time to build greater
amounts of death benefits to be paid out to beneficiaries. In short, the larger
the amount of capital contributed to the policy, the greater the death benefits
will be paid.
The
Living Benefits of SPL Insurance
Unexpected financial
requirements may arise
before the policyholder dies. If long-term medical expenses are required, LTC
or long-term care insurance can be beneficial. But if the insured fails at
paying the annual premiums for LTC, the SPL insurance plan provides a solution.
A couple of single premium life insurance
plans offer tax-free access to your death to pay LTC or long-term care
expenditure. This feature protects other assets from the overwhelming cost of
LTC. The remaining death benefit gets passed (income-tax-free) to the nominees
after the demise of the policyholder.
An
Outlook of Investment Options Available with SPL Policies
The following are the two popular SPL policies
offering different options for investment:
1. Single-premium
variable life insurance policy allows the insured to choose from a range of professionally-managed
share, bond, fixed account, and money-market sub-accounts.
2.
The single-premium whole life
insurance policy offers
a fixed rate of interest-based on the insurance company's investment experience
and economic conditions.
Summarizing
the Withdrawal Options
SPL covers give control over investments,
allowing access to emergency cash value, retirement, and other opportunities.
The most sought-after way to choose the cash in the financial plan is via a
loan. You can apply for 90% of the cash value of the policy as a loan. It
reduces the cash surrender value as well as a death benefit. However,
policyholders get an opportunity to repay that in order to re-establish the
considering benefits.
A policyholder can also withdraw funds and
take away withdrawals from the cash surrender value of the policy. The deducted
amount, taken away without paying the surrender charge each year, should be at
least 10% of the premium paid or 100% of policy's gains (whichever comprises a
larger amount).
The
Bottom Line
If the current cash is not required currently,
you can get a guaranteed life insurance plan with it. A single-premium life
policy can be an ideal plan in that matter. It is a great way to begin the
insurance cover with a lump sum amount paid only a single time.
