About Bonds

Many older Americans are concerned about transferring the wealth they have accumulated over their life to their heirs. They want to maximize the benefit that their children, grandchildren or a charity will receive. A single premium life insurance policy can accomplish this and even increase the amount of wealth transferred to the beneficiary.

A single premium policy requires an up-front payment of the premium amount. This payment creates an immediate benefit that is guaranteed until the policy holder dies. The amount of the death benefit will vary depending on the amount of money deposited, as well as the age, gender and health of the insured person. In some cases, the amount of money deposited will be multiplied by a factor of two or three when the death benefit is paid. Generally the younger the insured person is, the more money will be paid to their beneficiary.

For example, if a person takes out a policy by paying a one- time fee of $100,000, it is possible that the policy could grow to be $200,000 or even $300,000 by the time the beneficiary receives the death benefit. The investment options include an underlying traditional whole life policy or a universal life policy. These policies will in turn invest in bonds, money market funds or stocks.

Another advantage of the single premium policy is that it can also benefit the insured during their lifetime. The cash value of the policy can grow quickly and provide income to the insured if needed. Policies can also be surrendered at any time for the cash value or the insured may borrow money against the policy. Some policies stipulate that the surrender value will not be less than the one time premium that was paid originally.

Be sure to read the fine print before you buy a single premium life insurance policy. Some policies don't come with a guarantee that future payments will never be required. This is something your insurance agent may neglect to tell you.