Loading the player...

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.

BREAKING DOWN '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.

RELATED TERMS
  1. Variable Life Insurance Policy

    A form of permanent life insurance, Variable life insurance provides ...
  2. Single-Premium Deferred Annuity ...

    A type of annuity contract that is established with a single ...
  3. Universal Life Insurance

    A type of flexible permanent life insurance offering the low-cost ...
  4. Variable Death Benefit

    The amount paid to a decedent's beneficiary that is dependent ...
  5. Adjustable Life Insurance

    A type of life insurance that combines features of term and whole ...
  6. Unbundled Life Insurance Policy

    A type of financial protection plan that provides cash to beneficiaries ...
Related Articles
  1. Insurance

    A Look At Single-Premium Life Insurance

    Want to provide for your dependents and finance your own long-term care? Learn more here.
  2. Financial Advisor

    Advising FAs: Explaining Life Insurance to a Client

    Life insurance was initially designed to protect the income of families, particularly young families in the wealth accumulation phase, in the event of the head of household's death.
  3. Retirement

    How Whole Life Insurance Works

    Whole life insurance combines insurance and an investment component for policyholders.
  4. Insurance

    Dividend-Paying Whole Life Insurance: What to Know

    Many whole life insurance policies pay dividends. Here are what policyholders need to consider.
  5. Insurance

    Life Insurance: How Long Does It Take To Get Paid?

    How to file for a life insurance payout – and how long it takes to receive it. Plus, new ways to plan for payments that provide an income stream.
  6. Managing Wealth

    Life Insurance With an Increasing Death Benefit

    Why buy a life insurance policy with an increasing rather than level death benefit
  7. Retirement

    Beware the Sneaky Math of Universal Life Insurance

    Universal life insurance's cash value can be a cash cow – if there's any left. Read on to see if it'll work as an income source after you've retired.
  8. Insurance

    6 Ways To Capture The Cash Value In Life Insurance

    If you die with cash value left in your life insurance policy, the money goes to the insurance company – not to your beneficiaries. Here's what to do instead.
  9. Insurance

    Whole or Term Life Insurance: Which Is Better?

    Learn the difference between term life insurance and whole life insurance. Understand when it is beneficial to buy each type of life insurance.
Hot Definitions
  1. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
  4. Long Run

    A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all ...
  5. Quasi Contract

    A legal agreement created by the courts between two parties who did not have a previous obligation to each other. A normal ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center