Why Pay For LIfe Insurance WIth One Upfront Sum?
Why do people fund their policies this way? Since the policy has already been paid for, the entire face value of the policy is already in place. No more payments ever have to be made. This would be a simple way to make sure an estate was taken care of. A policy owner may decide to pay fifteen thousand. As soon as he or she does that, he could have the plan set up so it would leave $50,000 to an heir.
The policy beneficiary could be a child, grandchild, spouse, or a favorite charity. Understand that the numbers I used are just an example. Of course, the amount of money used to fund the policy, and the face value of coverage this will buy, will vary from person to person. If you are interested, you can get single premium life insurance quotes to compare how the numbers would work out for you. This is not the whole reason people purchase these policies of course. Of course, most life insurance policies will have an immediate death benefit.
And you only need to make smaller monthly payments to get it. Instead of investing $15,000 upfront, you could simply pay a fraction of that every month. These are whole life policies, and so they also accumulate a cash value. When the whole policy is funded at the start, the cash value can start to grow right away. Many of these policies grow as determined by some fixed interest rate or market index.
So a person can fund their policy with one lump sum, and the very next month they should start to see the cash value of the policy increase. You will have to check into any individual policy to see how that works, and of course, you have to remember that you are also paying for insurance. If you have some money, and you want to make sure you have life insurance and a cash account, this may be a good idea. An SPLI policy is not the best solution for all people. You may be more interested in term life or a final expense insurance rate comparison to find the right policy for you.