What is a Single Premium Life Insurance Policy?
[social_share]A Single Premium Life Insurance Policy is a life insurance policy that only has one premium to be paid.
Most life insurance policies have premiums that are paid throughout the course of the policy. These tend to be linked to income and are usually charged on a monthly basis, although they can be charged on an annual basis. From the lender’s perspective, these can cost money to administer as well as having a risk that the person who has taken out the life insurance may well cancel the policy part way through the agreed term.
A single premium is when only one premium is paid for the life insurance policy. In almost all cases this premium is paid at the beginning of the policy. As this both cuts costs and cuts risks of non-renewal, the life insurance company tends to prefer these and will offer lower charges for the life insurance. The company will also benefit from the interest on the premium and so, in many cases, will be able to offer a further discount.
Many shorter term life insurance policies will also offer the ability to pay in a single premium. The take up for these types of life insurance, particularly if the pay out is reasonably small, tends to be quite high. This is particularly true of annual life insurance and it can often be the case that a company will pay its life insurance (both as an employee perk and as key man insurance) in this way. In these cases, the saving, although worthwhile, can often be quite small compared with longer term policies.
Another area where life insurance single premiums can be popular is when there is a long term for the life insurance but with a relatively small payout. This can be the case with funeral plans and funeral insurance, where the sum is relatively small.
For larger life insurance policies the single premium is not very popular, which means that many providers will not offer it. Sometimes it can be the case that the price will be quoted only upon being asked.
If a person is looking for life insurance with a broker, it might be possible toget a significant discount if they are prepared to pay a single premium and so if this is a realistic option, they should inform a broker that they are willing to pay s single premium early in their discussions.
