The 4 Primary Disadvantages of Single Premium Life Insurance

Understanding the disadvantages of single premium life helps consumers make the most educated decision. Here are the 4 major disadvantages that should be considered when considering single premium life insurance:

  1. Lifetime distributions or loans of cash values may be subject to income tax and, if received before age 59½, a 10 percent penalty tax.
  2. The premium may be unaffordable.
  3. The amount of protection is low relative to the premium paid.
  4. Surrender of the policy within the first five to ten years may result in substantial surrender charges.

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Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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