Underwriting Still Needs To be Completed
Something to keep in mind is that underwriting will often still need to be completed and your overall return and the total death benefit is going to be gauged by your risk profile, current age, and current health.
According to Joshua Martin (Founder of Good Life Protection), this is one of the most significant reasons why you always need to work with an independent life insurance agent who can find you the best rates with the best potential life insurance company.
All life insurance companies have unique strengths and weaknesses.
Additionally, certain life insurance companies cater to certain health niches.
This is when using an independent life insurance agent with access to dozens of top-rated life insurance companies can become very beneficial for the consumer.
Not doing so can equate to the same thing as throwing your hard-earned money out the window.
Living benefits are a vastly under-rated benefit of single premium life insurance.
They are specifically designed to help provide financial relief during a financial crisis that occurs often due to illness.
According to Danny Ray, owner of Insurance for Burial, these riders often act as your “long term care” in these situations providing tax-free access to your death benefit to help cover these backbreaking medical costs.
Something to keep in mind in this situation is that the money is deducted from your total death benefit that will be passed on your beneficiaries’ tax-free at your passing.
Here’s an example.
Ted owns a single premium life insurance policy that he purchased for 205,000.00 when he was 52 years old that has a current death benefit of 510,000.00.
If Ted happens to fall ill and incurs significant medical expenses, he would be able to forward or “accelerate a portion” of these death benefits up to a maximum percentage such as 75% or 90% with some life insurance companies.
Let’s assume Ted needs 132,000 to pay for the cost associated with having cancer.
When Ted does pass away, the remaining death benefit provided to his beneficiaries will be the following.
510,000- 132,000= 378,000 (Given to Beneficiaries at Teds Death Tax Free).
Clearly, the versatility and protection provided from multiple angles is something not to ignore.
Especially if you have the financial means to add this barrier and outer layer of protection to your financial fort.
Finding the Best Companies for Single Premium Life Insurance
Plans are not hard to find, and plenty of life insurance companies offer the ability to purchase this form of life insurance.
However, we do recommend considering a few companies before exploring secondary options.
Again, as stated before, this is when it becomes essential to work with an independent life insurance agent or agency that understands your goals and situation, and that can effectively find you the best company to tailor towards your needs.
The Three Best Life Insurance Companies for Single Premium Life Insurance
American National (ANICO) has been around for over 100 years, initially founded in 1905.
American National is also known by independent life insurance agents as a top-rated life insurance company for permanent life insurance and currently is backed by an impressive A+ financial strength rating from A.M Best.
American National is also regarded as a top option in the industry for living benefits afforded to their policyholders on a wide range of life insurance products.
Protective Life Insurance
Protective Life Insurance is another great option to consider when shopping single premium life insurance.
Protective Life is another A+ rated company that was initially founded in 1907.
Protective Life is also known as one of the most competitively priced life insurance companies you can choose for term life insurance and guaranteed universal life insurance (GUL) among other products.
Lincoln Financial Group
Lincoln Financial Group has been a powerhouse in the life insurance and financial services market for years.
Lincoln Financial Group is another life insurance company on the list that’s been around over 100 years founded initially in 1905.
Additionally, LFG has some of the highest regarded permanent life insurance products on the market due to stable performing returns and excellent policy riders.
While plenty of other life insurance companies certainly offer single premium life insurance, these three companies are at the top of the list and should be considered.
Consumers are often curious of their options when it comes to accessing cash value with single premium life insurance policies or permanent life insurance in general.
In most situations, individuals will need to elect to either take a loan against the policy or can have the option to pull a certain percentage due to illness as we discussed previously.
It’s also important to realize that any money you remove from the policy will be deducted from the total death benefit or cash value (refer to our previous example).
This ultimately is reducing your total payout or total cash surrender for the policy and removing money from your beneficiaries at your passing.
This is not ideal, but sometimes it’s necessary. It all depends on your unique circumstances.
A majority of life insurance companies also have stipulations on your withdrawal options such as only allowing you to withdrawal 10% of the premiums paid into the policy or 100% of the policy gains.
Whichever is greater.
It’s imperative to discuss these options, stipulations and potential tax consequences with your agent, financial advisor, or accountant before making any withdrawals from your policy.
Drawbacks and Negatives with SPL
Single premium life insurance doesn’t come without a hindrance or two. Typically, SPL (Single Premium is life) is going to have large minimums to apply for a policy.
This may be $5,000 or higher depending on the company and all other factors involved.
Additionally, most investments in life don’t require medical underwriting.
This is not the case with single premium life insurance.
When purchasing this form of life insurance, your premiums, and the total death benefit will be significantly impacted by your age, overall health, and even your tobacco use.
Final Word, Single Premium Life Insurance Is a Versatile and Robust Option
While single premium life insurance may be cost prohibited for a significant number of consumers, it’s still a great option if your budget and financial plan allow for it.
With the options to cover costly medical expenses and the ability to get an immediate return for beneficiaries, it’s certainly a path worth discussing with a licensed agent who can place you with a life insurance company that can tailor towards your needs.