Single Premium Term Life Insurance, Good, Bad, and Other Options

Written by CFA Insurance

Life insurance has many benefits, but the main one is to provide financial support, which can cater to those left behind when you are gone. The beneficiaries are paid as soon as you die to help them maintain the financial standards you had set for them. It does not take long process like estate inheritance and can even be used for funeral expenses.

The single premium term life insurance is one of the different life insurance types available. To buy it, you pay a lump sum that guarantees a death benefit. It grows fast because the money is invested all at once.

What Is Term Life?

Term life refers to life insurance, a coverage given for a specified period at fixed payment. It is also known as life assurance because it is meant to protect and compensate your dependents in case you are no longer alive and provide for them financially. Once the limited period expires, a client has to renew coverage or forgo it, which means no death benefits for beneficiaries.

Common terms for life insurance are 1, 5, 10, 15, 20 and 30 years. The payout and the premiums remain constant throughout the term in most policies.  To enjoy maximum benefits, one should make sure it coincides with years when they have a family or dependents that look up to them for daily financial support.

What Is Single Premium Life Insurance?

Single premium life insurance is a policy paid upfront with a lump sum. It is different from life insurance, which is renewed periodically. With this type of life insurance policy, you receive a guaranteed death benefit, which extends until death. If you get a cash value policy, the value of your money grows, and after some time and you can even get a loan against it.

You are not required to make additional payments after the single payment. However, death benefit value will depend on the lump sum invested, health and age. A good example is someone who invests $50,000 and dies at the age of 30 years while still in good health. For such a premium holder, death benefits could be $250,000, but a person who is more than 60 years old die in good health may get $125,000 for the same.

Different Types of Single Premium Life Insurance

When choosing single premium life insurance, you have options that meet different needs. They include:

Single premium whole life

This type of single premium life insurance builds cash value over the years. The policy grows at guaranteed interest rates as time goes by.

Single Premium Variable Life

Single premium variable life insurance is different from standard single premium coverage because its cash value increases depending on how the policyholder invests it. Its growth rate varies because your insurer limits it, but all providers offer something similar to a mutual fund, which means you do not manage the money despite choosing the investment products.

This life insurance gives vast benefits if the low risk selected products perform beyond the expected growth. The problem is no one can guarantee you such performance. In some cases, the policyholder ends up with reduced policy value because, in addition to the risky investment, there are also management fees.

Single Premium Universal Life

This life insurance is similar to whole life insurance, but the main difference is that it covers you for a specific period. Once you attain a certain age, it expires but can be set to span a whole lifetime.

It also has minimum guaranteed cash growth, though the investment performance determines the growth rate. Just like in the variable life, you are given different investment options.

What are the benefits?

Term life insurance is a good fit for almost anyone. It is most excellent for people with young families or people who depend on them financially. This life insurance has numerous benefits including the following:

Single payment

A single premium life insurance does not come with the problems of future payments. You only make a single payment and you are guaranteed death benefit.

Offers long-term care insurance

This type of insurance gives financial help to people who need assistance to complete their activities of daily living, which is also known as ADLs.  The activities include eating, dressing, bathing, continence, toileting, and moving.

This insurance is costly, but some SPL provides a tax-free death benefit to allow the policyholder to pay for the expenses. Your beneficiaries are given whatever remains after your death.

Assistance in case of terminal illness

Single premium life insurance policies offer what is referred to as accelerated death benefit rider.  It comes in handy when the policyholder is diagnosed with a terminal illness. This means you can access some of the benefits if you have a life expectancy below 12 months. It relieves the financial burden off your family.

The Best Temporary Life Insurance

Term insurance gives you the best option when looking for a way to meet temporary life insurance requirements. It works perfectly a policy that does not last for than ten years. For duration from ten up to fifteen years, you can choose the best option based on the circumstances and facts of the particular case.

Term insurance is a better alternative than the cash value insurance issued to policyholders below forty-five years but a bad choice for anyone older than this.

Inexpensive For Young Persons

Young people get high-value coverage at a low and inexpensive immediate cost. Sometimes it may exceed what they need when they get the coverage, but with time it proves beneficial. It gives them excellent coverage as their family needs grow.

Higher death protection

The term insurance has renewable and convertible conversion features. They give the policyholder higher death protection more than what one can ordinarily afford. As time goes by, you can lock-in your premiums and the cash values grow as your ability to pay premiums also increase.

Beneficiaries receive the benefits quickly

The proceeds from life insurance are different from the probate estate and therefore the beneficiary gets paid without any delays. The only time it may be delayed is when the estate is included in the policy as a beneficiary.

No Taxes

The term insurance death benefits are not subject to federal income taxes. They are also exempted from the state inheritance taxes. This means they go directly to the beneficiary without any deductions.

Collateral for a personal loan

A life insurance policy works as perfect loan security. Some lenders will ask for permanent policies due to their cash values, but even term policies are sufficient especially if the borrower has good credit scores, which means the loan will be repaid unless the person dies.

Flexibility

Term life insurance comes with several options. You can have one that lasts as short as a single year. If you are looking to lock in rates, you have a five-year policy or go for extended ones from 10, 15, 20 and 30 years plus.

Gives you peace of mind

Term life insurance gives you peace of mind as far as your family’s financial provision is concerned. You know your family is catered for in case you die unexpectedly.

What are the Disadvantages?

You only win when you die

You spend your life paying for term insurance to secure the lives of your loved ones. In the case of a term policy, as time passes and you are still around, it means you get nothing from the insurance company and so you have to renew. While no one looks forward to death, it is the only way you win and the benefits of your term life insurance are paid out.

High Cost

Paying for single premium life insurance is expensive. You have to give a large amount of money upfront. They cost over $10,000 making it a policy for those who can afford such money.

How Can I get a Single Premium Policy?

To get a single premium policy you have to follow the steps below:

  1. Get a good insurance company that is genuine and will give you excellent services. Some are not trustworthy, so ask for referrals and check reputation before you settle for one. You can choose to buy your SPL from the carrier of your other policies because it increases your chances of getting a discount.
  2. Fill out an application and give out personal information plus health history. You must also provide details on your lifestyle and undergo a physical medical examination. The application is reviewed by an underwriter to determine your financial risk. You can be approved for the single premium life insurance or denied after the review.
  3. Choose the best investment option. You have to choose between single premium variable life and single premium whole life. The former allows you to enjoy immense benefits if the market gains while the later is stable and conservative. Choose according to fluctuations in the market.

How good are the discounts?

Getting discounts from your single premium term insurance provider is possible.  So how good are the discounts and how do you earn them?

Safety discounts

You get these discounts if your insurance provider can prove you take good care of your body. Simple ways to do these include exercising and being a non-smoker.  Other safety discounts include low insurance cost for those who are married; insurance companies have realized that married people do not die prematurely like those who are single.

Bundling discounts

This means merely buying your insurance policies from one company. Get the SPL from the same company where you purchased your auto insurance and you will definitely get a small cut.

Group discounts

These are discounts given to people who belong to a particular profession or association.  Good examples include teachers, government employees and military members.

Loyalty discounts

The discounts are people who stick with the same company for years. However, you may also be considered for this type of discount for a lump-sum coverage worth over $250,000

Single premium term life insurance rates

Single premium term life insurance rates vary from one provider to another. Here are a few examples:

A male who is 40-years old with the preferred health class is qualified for the following rates.

  • For a payment of $74,456, you get coverage of $500,000
  • For a payment of $136,184, you coverage of $1,000,000
  • For a payment of $340,924, you coverage of $2,500,000
  • For a payment of $340,462, you get coverage worth $5,000,000

10 years term worth $250, 000

single premium term life insurance rates


For men:20 -year term for women

single premium term life

For men:

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Single premium term life policies are the best way to go if you have large amounts of money to save. By doing this, you maximize the growth of cash value and use it in old age. You can use the money for medical expenses or pay for your grandchild’s education and still secure the financial status of your loved ones after your passing. 

If you’re looking for single premium term life insurance policy then you’re at the right place. We specialize in getting single premium policies at the best rates. We shop around with all of the companies on the market to get you the best rate, at no extra cost to you! Contact us today for a free consultation.

About Jason Hill
About Jason Hill

Jason is the founder of CFAinsure. His years of experience in the business have helped him serve and represent hundreds of clients. Jason ensures his clients are well educated and informed by putting their needs first. Each appointment is tailored to individual needs, via specific materials and educational tools. The real benefit for his clients is the end result: peace of mind.

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