There are generally three types of single premium life insurance policies, with many slight variations, that are available. Understanding them will help the consumer make the most educated decision:
- single premium ordinary whole life;
- single premium current assumption (interest sensitive) whole life, and;
- single premium variable life.
Although insurers and policyowners can configure universal life insurance policies initially to mimic single premium policies, policyowners have no assurance that they will not have to pay additional premiums at a later date to maintain the face value of the coverage. Therefore, single payment universal life insurance technically is not single premium life insurance.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM