This insurance plan is a fully-funded whole life insurance policy. A lump-sum of money is paid into the policy to create a death benefit that remains level at all times and maintains an increasing cash value. Amount of coverage usually is directly proportional to the amount of initially contribution, your age and your health.

Let’s look at an example. If a healthy male at age 40, puts in $115,000 to start a Single Premium Whole Life plan, his immediate coverage could be as a much as $500,000. That is a gain of $385,000. If you die next day or any time till the age of 121, your beneficiary will receive a total of $500,000 generally income-tax free. That’s how simple it is!

Three of the most prominent benefits:

1. Works as a great Final Expense or Burial Life insurance plan.
   For example, a 65 years old man in average health can get a $25,000 policy for only a single payment of $13,000.
   (All figures are rounded to nearest 1000)
   Women usually get more for less. It is mainly due to the mortality factor. They tend to live longer than men.
2. Some of these plans also offer tax-free access to your cash value or death benefit for managing Long term Care expenses.
3. Some of these policies also come along with a free rider called, Terminal Illness Rider. Accordingly, if you are diagnosed with a terminal illness and have a life expectancy of 12 months or less, the insurance plan allows you to withdraw part of the death benefit while you are still alive.

TAX TREATMENT
The single premium contribution that you put in this plan grows tax deferred. You will only pay tax on the gain if you decide to withdraw or borrow from the policy. However, there could also be IRS penalty as these policies are usually considered modified endowment contracts. Always, consult your tax advisor before making a decision to borrow.

However, please note that upon your demise, your beneficiary in most circumstances will receive the entire death benefit (minus what you borrowed, if you did) income tax free.

CONCLUSION
If you have a lump-sum of cash sitting somewhere and you don’t need it right now and in your mind you know that this money is part of what you will leave behind for your loved ones or your favorite charity, single premium whole life perhaps is an ideal option for you.

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