Gift Planning to Children, Charities and Churches with Single Premium Life Insurance

You have a sum of money sitting in a bank savings account or in a certificate of deposit. The plan is to give this as a gift to your children, a favorite charity or to your church.

It's safe, right? The interest is really growing the amount you have in there, right? You report the interest as taxable income, right? And what happens to your gifting intentions when you pass away? Probate and inheritance taxes leave less than you intended.

There's a better way of gift planning that is very simple: Single Premium Life. Single Premium Life (SPL) is a type of life insurance in which a lump sum of money buys lifetime coverage with no future premiums and is guaranteed to remain paid up. SPL is a full-funded policy that builds cash value and death benefit.

Take a look at the following illustration: (left click screenshot to enlarge)

Single Premium Life Sample Illustration
60-year old, Male, Non-Tobacco

What you should notice in this sample illustration is this:

A one-time funding of $10,000 creates an immediate death benefit of $18,262 for this 60-year old male. Please note that death benefit is determined by age, gender, tobacco use and overall health.

Cash value builds immediately. Some insurance companies are participating, meaning dividends are paid on single premium life policies. In the illustration, accumulated dividends results in the death benefit increasing to $21,479 after 20 years without ever having to add another dime.

Living Benefits

It's all well and fine to discuss the death benefits of a single premium life policy and how that will transfer to your children, a charity or a church. What if you need access to that money now? Many SPL plans have a feature, called an accelerated death benefit, which provides access to funds in the event of a terminal, critical or chronic illness situation.

Tax Treatment

Accumulated dividends and cash value grow tax-deferred in a single premium life policy. Money withdrawn for other than a terminal, critical or chronic illness, may result in a taxable event. (see a tax expert about Modified Endowment Contracts) However, and this is most important, the policy death benefit will be paid to your beneficiary tax-free when you pass away.

Conclusion

As stated earlier, a single premium life policy is a simple way to plan gifts to those you love. No complicated estate planning or expensive attorney is necessary to get this set up. A simple application, a few health-related questions and you have your gift planning done. Simple, straight-forward, and grows you assets faster than that certificate of deposit account does!

FIND OUT HOW MUCH YOUR GIFT COULD BECOME