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.

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Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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