Why Bailout Provisions do not Make Single Premium Life Insurance Policies Good Short Term Investments

Why Bailout Provisions do not Make Single Premium Life Insurance Policies Good Short Term Investments

Bailout provisions may eliminate or reduce surrender charges imposed by the insurer, but they cannot waive the penalty tax applicable to persons under age 59½. Generally, better short-term investments are available without the mortality charges and the potential penalty tax. Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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Why Single Premium Life Insurance Policies are Not a Good Short-Term Investment

Why Single Premium Life Insurance Policies are Not a Good Short-Term Investment

Not generally. Single premium policies typically have significant surrender charges in the early years. Also, because newly-issued policies are likely to be MECs, if the policyowner terminates the policy before age 59½, he or she may incurs a 10 percent penalty tax in addition to the income tax payable on any taxable gain from the terminated policy. Discover our articles archive here. View the latest policies Lifequotes has to offer. Reproduced with permission.  Copyright The…

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Why Life Insurers Guarantee a Higher Rate of Interest on Single Premium Policies Than Their Other Policies

Why Life Insurers Guarantee a Higher Rate of Interest on Single Premium Policies Than Their Other Policies

Life insurers, the insurance company receives the full premium that will be paid under the policy at the beginning of the contract. This permits it to invest the money in long-term assets with fairly certain or predictable long-term returns. These longer-term assets generally pay a higher yield than shorter-term investments. In addition, regulations permit the insurance company to base its reserve calculations on rates as high as 6 percent annually for single premium policies. The…

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Is Single Premium Whole Life Insurance a Good Idea for Somebody who has no Need for Life Insurance?

Is Single Premium Whole Life Insurance a Good Idea for Somebody who has no Need for Life Insurance?

Probably not. A single premium policy does provide a death benefit, which means the client is paying mortality charges. If the client does not need or want life insurance protection, a single premium deferred annuity can provide similar tax-sheltered cash buildup benefits without the mortality charges. Visit our articles archive here. View the latest policies that Lifequotes has to offer. Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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How to Select the Best Single Premium Life Insurance Policy

How to Select the Best Single Premium Life Insurance Policy

Selecting the best cash-value life insurance policy is a difficult task involving a number of complicated concepts and analyses. However, because the investment element of single premium life insurance is a paramount concern, focus should center on the following factors: Compare the current rate being credited to policy cash values and the length of the guarantees. All else being equal, policies with higher current rates and longer guarantee periods will be better than those with…

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Commissions and Acquisition Costs on Single Premium Life Insurance

Commissions and Acquisition Costs on Single Premium Life Insurance

The sales commission is generally about 3 to 10 percent on these products. In addition, the insurance company typically pays a state premium tax of about 2½ percent. However, these fees generally are taken into account when the company quotes the short-term guaranteed net rate that it will credit to the policy in the first or first few years. For example, to help recover up-front costs, most policies might be subject to a surrender charge,…

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Alternatives to Single Premium Life Insurance

Alternatives to Single Premium Life Insurance

All life insurance policies can provide tax-free cash upon death. The unique feature of single premium life insurance is its large tax-free or tax deferred cash buildup. If a person desires a combination of high tax-preferred cash accumulation and life insurance coverage, they should consider exploring several others: The combination of a single premium deferred annuity and decreasing term insurance – Cash values accumulate in both annuities and single premium life insurance policies on a…

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Tax Implications of Single Premium Life Insurance

Tax Implications of Single Premium Life Insurance

Death benefits under single premium life policies usually are paid free of any federal income tax. In general death benefits paid under these policies are subject to the same federal and state income, estate, gift, and generation-skipping transfer taxation rules as all other types of life insurance policies. Taxation of Lifetime Distributions and the MEC Rules Taxation of lifetime distributions and loans from single premium policies generally depends on when the policy was acquired. Policies…

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The 4 Primary Disadvantages of Single Premium Life Insurance

The 4 Primary Disadvantages of Single Premium Life Insurance

Understanding the disadvantages of single premium life helps consumers make the most educated decision. Here are the 4 major disadvantages that should be considered when considering single premium life insurance: Visit our articles archive here. View the latest policies that Lifequotes has to offer. Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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8 Advantages of Single Premium Life Insurance

8 Advantages of Single Premium Life Insurance

Understanding the advantages of single premium life helps consumers make the most educated decision. Here are the 8 major advantages that should be considered when considering single premium life insurance: The initial guaranteed rate in a single premium policy generally is quoted “net” of commissions and other fees. Therefore, the policyowner’s entire premium goes into the cash value. Cash value interest or earnings accumulate tax-free or tax deferred, depending on whether gains are distributed at…

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