Single premium life insurance, or SPLI, is whole life insurance that is funded – as the name implies – with one large premium right up front. This is different than the way we usually think about paying for our life insurane premiums with multiple premiums paid over a span of years, or even a lifetime. For more information, refer to Single Premium Life Insurance Explained.

Aside from the most obvous difference, the way it is paid for, what else is different?

• Because it is funded right away, with that one large payment, an SPLI policy has the potential to build a cash value very quickly. Some policies earn money on the cash portion at a fixed interest rate, and some will be tied to a market index, like the S&P 500.
• The money grows tax deferred. There will not be the need to pay taxes on growth in the account  like you would have to on a regular bank savings account.
• This cash value gives the owner some options. In the future, it could be used as an asset. That means it can be borrowed against, cashed in, or sold in a life settlement.
• So in addition to paying for life insurance, that premium can actually help build an asset that can be used while the owner is alive.
• As for the insurance part, it can be used to turn one sum of money into a much larger estate. Let us say a 65 year old has $12,000 in cash that is not needed to live on. This is just an example, but that $12,000 might be turned into a $100,000 face value life insurance policy. Of course, you understand that actual rates depend upon many factors like the insurer, current premium charts, age of insured, health, etc.

So what’s the downside of single premium life insurance?

Well, of course, the insured person needs to have the money to set aside. If you do not have the cash to fund the policy, that you do not expect to need for several years, this may not be a good option for you. A traditional life insurance policy, and more liquid forms of savings or investments, could be a more flexible and better option in that case.

If a product like this interests you, you can get exact quotes from insurers or agents in your local area. Visit here: Over 50s Life Insurance.