"If somebody has four old whole-life contracts with $250,000 worth of cash surrender value and an $800,000 cumulative death benefit built up, if they're insurable, we're able oftentimes through a 1035 exchange to do a new no-lapse-guarantee universal life policy and obtain maybe a $1.2 million death benefit for the same $250,000 deposit without any additional premiums being required," he says.
Who benefits from SPL?Who might benefit most from an SPL? Hasenauer says it is best suited for those who want to set aside a large sum they'll never need themselves for the next generation.
"If you're a short-term investor, you don't belong on the life side, which is a product designed for your ultimate end of life," she says. "If you have a need for the insurance to fund a trust for heirs or a special-needs grandchild who will require lifetime income, this is the perfect investment for that. You just put it aside, you know it's there, and it's going to build rapidly."
Al Barnes, a life insurance specialist based in Alabama, says applicants age 55 and under with a 30-year time horizon have the best chance of maximizing an SPL. "Someone who is 75, who's looking at maybe a 12-year time horizon, they'll probably want guaranteed universal life to get the biggest bang for their buck," he says.
But because of the complexities of estate planning with life insurance products, when it comes to parting with a sizable chunk of cash, he recommends finding a crack financial planner first.
"(SPL) gives you a respectable death benefit with that money, therefore it has a use," he says. "Now, should that be your use? That's where you need advice from somebody who is not selling it to you."
In Barnes' view, there's a simple way to end the confusion over single-premium life.
"Single-premium life is not an investment product and a deferred annuity is not an estate-planning tool," he says. "A variable annuity is during-life money and single-premium whole life is after-life money."
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