Single Premium Life Insurance

SPLI: A Complete Guide

Single Premium Life Insurance: Secure Your Legacy with One Lump-Sum Payment
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Build Lifelong Protection and Wealth with Just One Payment

When planning for the future, life insurance often plays a critical role in protecting loved ones and preserving wealth. Among the different options, Single Premium Life Insurance (SPLI) is one of the most efficient ways to secure lifelong protection with just one upfront payment.

This page explains what SPLI is, how it works, its benefits, drawbacks, and who it’s best suited for.

What Is Single Premium Life Insurance?

Single Premium Life Insurance is a type of permanent life insurance that is fully funded with a one-time lump-sum payment. From the day you purchase the policy, it provides:

  • Guaranteed lifelong coverage

  • Immediate death benefit (often much larger than your deposit)

  • May have Cash value growth on a tax-deferred basis

Unlike traditional term, universal or whole life insurance, you don’t have to worry about ongoing premium payments—the policy is paid in full.

How Does It Work?

  • You make one lump-sum deposit to get a lifetime of coverage.

  • Coverage begins immediately, providing a tax-free death benefit for your beneficiaries.

  • If it is a Cash value plan, the values grow inside the policy, tax-deferred.

  • Optional living benefits may allow access to funds in case of illness or emergencies.

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Benefits of Single Premium Life Insurance

  • Instant Leverage
    Your deposit buys a much larger death benefit. Example: A $100,000 payment could create $200,000+ in coverage.

    Tax Advantages

    • Death benefit passes to heirs tax-free

    • Cash value grows tax-deferred

    • Potential estate planning benefits

    Liquidity
    Withdrawals or loans may be available from cash value.

    No Ongoing Premiums
    One payment, and you’re covered for life.

    Wealth Transfer Tool
    Maximize the inheritance you leave to children, grandchildren, or a favorite charity.

Things to Consider

High Upfront Cost – Requires significant liquid savings.

MEC Classification – Most SPLI policies are considered Modified Endowment Contracts (MECs). Withdrawals before age 59½ may face taxes and penalties.

Less Flexibility – Once funded, coverage and premium amounts can’t easily be adjusted.

Opportunity Cost – The lump sum could be invested elsewhere with different risk/return potential.

Who Should Consider Single Premium Life Insurance?

Is It Right for You?

This policy works well for individuals who:

  • Are 50–80 years old with extra savings or investment funds

  • Want to leave a tax-free legacy for heirs

  • Don’t want to manage ongoing premium payments

  • Have sufficient income/assets to cover retirement needs

  • Want living benefits such as chronic illness riders or accelerated death benefits

Single Premium Life Insurance is an excellent choice if you:

  • Have extra cash you don’t need for living expenses

  • Want to grow wealth safely while leaving a legacy

  • Prefer simple, one-time funding without future bills

However, it’s not the best fit if you need liquidity for day-to-day expenses or if you’re still building savings.

Final Thoughts

Single Premium Life Insurance is more than just protection—it’s a wealth transfer and legacy tool. With one lump-sum payment, you can create lifelong coverage, tax advantages, and peace of mind for your family.