Depending on your situation the simple answer is… quite possibly.  In fact, single-premium universal life insurance, SPUL, may be one of the most overlooked, misunderstood life insurance products available today and rarely recommended by traditional life insurance agents. However, expert Tax-Free Retirement Specialists use this product frequently with their clients

Single Premium Universal Life is an immediate issue, universal life policy, which combines a death benefit with a savings account. It’s an easy and efficient way for consumers to purchase coverage and transfer wealth to the heirs — TAX-FREE.  Purchased with one single premium payment, this product is designed for people who value added security, flexibility, and cash value with lifetime coverage.

How do you fund a single premium life insurance policy?

One area where a significant amount of SPUL policies are being used is to consolidate stray life insurance policies with lots of cash value where the owner has no plans for the cash value.  By simply using the funds from those policies as a lump sum into a new single premium universal life insurance policy the new policy is usually larger than the sum of the smaller policies and is now paid in full.

Why use a Single Premium Life Insurance Policy?

The SPUL insurance policy can help clients meet a variety of financial objectives.

• Single-premium life policies require only minimal underwriting and are a good choice for the elderly or those with some health issues.
• Ownership of a life policy by the beneficiary or a trust can “remove” the asset from the estate for estate tax purposes.
• Advanced estate and legacy planning.
• Insuring a key employee or a business continuation plan.
• Policy loans from the cash value TAX-FREE
• Some SPUL’s will accept additional premiums if you believe you might want to deposit additional money later to increase your benefit.
• Provides a simple and efficient way to purchase coverage and transfer wealth tax-free. 
• Immediate issue policy purchased with a single payment. 
• Provides a policy with a death benefit much higher than the payment itself.

Single premium life insurance cash value increases much faster than a policy with monthly or annual premiums because it is funded with the entire lifetime premium at the issue of the policy.  Just like other insurance policies, upon the death of the insured the proceeds of the policy go to the beneficiaries free of federal income or estate taxes.

Can it be used as an alternative to an annuity?

The big advantage of SPUL is that it passes the death benefit to your heirs tax-free (although there may be estate taxes to consider).  In many cases, those benefits also will pass quicker to heirs outside of probate, a real plus for larger estates.

Because the annuity’s $150,000 growth was tax deferred the beneficiary will have to pay tax on $150,000.  Life insurance is always transferred tax-free with zero taxes due to the federal government.

Additional Benefits to the SPUL owner

Since an SPUL premium is paid in full at policy issue the policy is planned to last the owner’s entire life time.  The cost of the insurance of the policy will be paid from the cash value and any interest gain.  The only way that the policy will not last the entire lifetime is if the owner were to take out a tax-free loan from the policy for their use and not pay the loan back.  As long as the loan is repaid back into the policy, the insurance policy will continue to last the owner’s entire lifetime.

SPUL’s are the least understood life insurance product by traditional life insurance agents today.  By talking with an expert Tax-Free Retirement Specialist they can discuss your specific goals you are seeking to accomplish and assist you in determining if this is a the best product choice for you.  Click here to find a local Tax-Free Retirement Specialist in your area.

What is Life Insurance?

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An IUL provides the value of a permanent life insurance with the cash value of the policy invested into an account that is “linked” to the performance of a market index like the S&P 500. The value to the insured by linking to the index is exactly like a Fixed Indexed Annuity…in a positive year the account can earn some of the gains of the market-linked index and in a negative year none of the losses. In addition, this cash value account has other benefits including a minimum guarantee on performance and tax advantages.

The IUL cash value can never lose money due to the market-index having a down or flat year. The insurance company guarantees your account value every year and locks in the previous year’s earnings. During the next year, the account value and earnings posted to your account are locked in until the next anniversary date of the policy. At that point if the market has grown from the previous year, then a percentage of the growth is applied to the account value. If the market has fallen, there is no change to the previous years locked in account value.

The cash value and the earnings of an IUL grow tax deferred like a qualified retirement plan (IRA and 401K). This means your account actually benefits from triple compounding earnings… you earn interest on your account principle, you earn interest on your interest, and you earn interest on the money you aren’t paying in taxes on your interest earned.

This money is your money for use at the time you decide to use it; for your children’s college education, purchases, and even retirement income – TAX FREE. Seek out your local Retirement Life Solutions Specialist to determine if an Indexed Universal Life Insurance policy may be an benefit to your family’s protection and an addition to your retirement portfolio.

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Life Insurance Education