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Single Premium Insurance Policy?
05-17-2012, 11:12 AM
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#1
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Recycles dryer sheets
Join Date: Nov 2004
Posts: 188
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Single Premium Insurance Policy?
A buddy of mine called (he's retired). Just closed on a house and someone tried to sell him a Single Premium Insurance Policy for his wife. They'd give the guy $25K, and, X-years from now, will get $67K(?). I tried to explain that mixing insurance and investments is not a good idea. Problem is, I am unfamiliar with this product. Can anyone give me some idea as to whether it's a "bad thing" or other cautions related to this program.
My instinct is, the guy they talked to is a salesman, he has no fiduciary interest in my friend or his spouse and this will likely be an expensive, less then productive way to spend a good deal of money.
Can anyone help me on this?
Rich
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05-17-2012, 11:18 AM
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#2
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 13,856
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What kind of policy are we talking about? Life insurance? Something else?
I have seen single premium life, annuity, LTC and even homeowner's policies.
__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
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05-17-2012, 11:23 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 2,749
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It's almost certainly a bad deal for your buddy but you didn't give me enough details to say for sure.
The "very rich" can justify buying a single premium life insurance policy to help with estate taxes. Essentially, they buy the policy for "x." When the person dies, the estate receives the cash (many times x) which can be used to pay any estate tax. This can help keep a family business intact. There are also ways of gifting the insurance and handling it outside of the estate. If this is the reason, get a good estate planning attorney.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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05-17-2012, 03:02 PM
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#4
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Recycles dryer sheets
Join Date: Nov 2004
Posts: 188
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I'll get more details from by buddy. He's not financially savy and I am afraid the salesman has spotted a couple with a few dollars and is looking to relieve them of some of their dough.
Thanks,
Rich
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05-17-2012, 04:47 PM
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#5
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Full time employment: Posting here.
Join Date: Nov 2009
Location: VA
Posts: 922
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It's probably a single premium whole life policy. $67k is almost certainly the death benefit, not cash value.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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05-18-2012, 02:35 PM
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#6
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Dryer sheet aficionado
Join Date: May 2012
Posts: 49
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Maybe is longevity insurance?
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05-18-2012, 08:04 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Nov 2010
Posts: 3,774
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 Quote:
Originally Posted by dgoldenz
It's probably a single premium whole life policy. $67k is almost certainly the death benefit, not cash value.
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+1 the only sensible reason that I can think if is if the retired buddy has a pension with less than 100% joint benefit and he is buying a SP life policy with the plan that his wife would use the life insurance death benefit to buy a SPIA upon his passing that has a monthly benefit equal to the excess of his monthly pension benefit over his wife's survivor benefit.
Unless it is something along these lines, I would be skeptical.
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05-18-2012, 08:41 PM
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#8
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Full time employment: Posting here.
Join Date: Nov 2009
Location: VA
Posts: 922
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Quote:
Originally Posted by pb4uski
+1 the only sensible reason that I can think if is if the retired buddy has a pension with less than 100% joint benefit and he is buying a SP life policy with the plan that his wife would use the life insurance death benefit to buy a SPIA upon his passing that has a monthly benefit equal to the excess of his monthly pension benefit over his wife's survivor benefit.
Unless it is something along these lines, I would be skeptical.
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If that was the plan, a single-premium UL policy would get him twice as much death benefit for the same price.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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