Single Premium Variable Life Insurance
Single premium variable life insurance is a type of life insurance where a single sum of money is paid into the policy in return for a benefit at death. The deposit is allocated to one or more variable sub-accounts. A variable sub-account is similar to a mutual fund. At the death of the insured, the death benefit is paid to the beneficiary.
To provide a benefit to heirs that is free from income tax while avoiding the delays of probate.
Single premium life insurance is best suited for those who probably will not need to access the cash value in their lifetime, but wish to leave an income tax free benefit to heirs.
- Individual Selection – Individuals have a choice of variable investment accounts.
- Growth Potential – The death benefit of a single premium life insurance is larger than the original investment, and can increase based on investment performance.
- Tax Deferral – Growth of investment accounts inside of policy are tax deferred.
- Liquidity – In almost all circumstances, single premium life policies will be classified as modified endowment contracts. The result is a 10 percent IRS penalty will be assessed on all gains withdrawn or borrowed before age 59 1/2. Loans and surrenders against earnings are also subject to income tax to the extent of any gain in the policy. Loans and withdrawals can negatively impact cash value growth and policy death benefits. If the policy is surrendered, a charge may be assessed by the insurance company.
- Minimum Premium – The minimum is $10,000 and additions are not permitted.
- Insurability Standards – The insured must meet the company’s standards for insurability.
For more information, please contact your local financial advisor.
Edward Jones operates as an insurance producer in California, New Mexico and Massachusetts through the following subsidiaries, respectively: Edward Jones Insurance Agency of California, L.L.C., Edward Jones Insurance Agency of New Mexico, L.L.C. and Edward Jones Insurance Agency of Massachusetts, L.L.C.