Single-Premium Life Insurance

AAA

DEFINITION of 'Single-Premium Life Insurance'

An insurance plan in which a lump sum of cash is paid up front to guarantee payment to beneficiaries. Because single-premium policies are instantly fully funded, the money invested builds up rapidly, making for a potentially sizable benefit even in the event of the policyholder's sudden death. Following the Tax Reform Act of 1986, this type of insurance policy became a popular tax shelter.

INVESTOPEDIA EXPLAINS 'Single-Premium Life Insurance'

There are a couple of popular single-premium policies: 1) Single-premium whole life, which offers a fixed interest rate paid by the insurance company which taken on any potential risk rather than the policy holder; and 2) Single-premium variable life, which allows policy owners to select from a menu of professionally managed financial portfolios.

VIDEO

RELATED TERMS
  1. Appleton Rule

    A regulation initiated in 1901 by Henry D. Appleton, a New York ...
  2. Life Insurance

    A protection against the loss of income that would result if ...
  3. Insurance

    A contract (policy) in which an individual or entity receives ...
  4. Premium

    1. The total cost of an option. 2. The difference between the ...
  5. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an ...
  6. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
Related Articles
  1. Insurance

    Can I Get Life Insurance?

    Find out what you can do to get the coverage you need for the right price.
  2. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  3. Home & Auto

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  4. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  5. Retirement

    Variable Vs. Variable Universal Life Insurance

    Do you know why you might need one policy versus the other? Read on to find out.
  6. Retirement

    Life Insurance: How To Get the Most Out Of Your Policy

    There are many benefits to owning a life insurance policy - if you get the right one for you.
  7. Options & Futures

    Long-Term Care Insurance: You Have Options

    The latest offerings provide more coverage and the ability to pick and choose what types of coverage you'll need.
  8. Professionals

    What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase total compensation for employees.
  9. Professionals

    What's the average salary of an actuary?

    Get insight into the intriguing career of risk analysis and forecasting. How much do actuaries make, and how is this field expected to fare in the coming years?
  10. Insurance

    How to Use a Waiver of Subrogation

    A waiver of subrogation means that a party to a contract waives the right to allow someone (usually an insurance company) to sue the other party to the contract in case of a loss.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center