Single Premium Life Insurance For Seniors

Added: (Mon Jul 09 2007)

Pressbox (Press Release) -

Single-premium life insurance is a unique insurance product that appeals to many senior citizens who have reached retirement with substantial savings. It is a tax shelter that can be used to pass on an inheritance or, if needed, to pay for long term care.

Single-premium life insurance is a form of whole life insurance. It builds cash value and earns interest over the life of the policy. As the name implies, single-premium life insurance is paid for in a lump sum, instead of in installments, or premiums, over a long period time. Equal to years�even decades�of payments, the lump sum is large. A $10,000 policy for a person aged 65, for example, would require a lump sum payment of at least $5000. The policies (and the lump sum premiums) can be huge: $100,000, $200,000, or more. With the single payment, the policy is fully paid for. The policy remains in effect until death or until the death benefit is used for another purpose.

One benefit of single-premium life insurance is that the value of the investment automatically doubles, triples, or more. Another plus is that, unlike other assets, an insurance death benefit is exempt from estate taxes. In fact ownership of the policy can be transferred to a beneficiary or heir while the policyholder is alive without significant tax liability. Since the policy is paid up at the outset, the new owner(s) do not have to make payments on the policy, and it can never be canceled for nonpayment of premiums.

The single-premium policy can be structured to pay the policyholder during his or her lifetime under special circumstances. For example, the policy can have a clause that allows for tax-free access to the death benefit in the event that the policyholder has a terminal disease. It also can include a rider that allows the death benefit to be paid for nursing home care not covered by Medicare. Any remaining death benefit is paid to the beneficiary upon death. This feature allows seniors to have long term care insurance without paying a monthly (or any) premium for it. The single-premium life insurance seamlessly morphs into long term care insurance.

Once the exclusive province of the wealthy, single-premium life insurance has become a flexible wealth-protection tool for any senior with even a few thousand dollars to spare.