Single Premium Variable Life Insurance (SPVL): Suitable?
An insurance policy purchased with a single premium allowing the investor to allocate cash value among a selection of variable portfolios.
Earnings are tax deferred until withdrawn or borrowed. At death the cash value and death benefit pass income tax free to the heirs.
Single Premium Variable Life Insurance (SPVL) is suitable for investors who:
• Are unlikely to spend the money during their lifetime.
• Like the security and wealth transfer advantages of the life insurance death benefit.
• Want to follow an active investment strategy that involves a high level of taxable income – particularly ordinary income.
• Have a long-term (+10 years) investment horizon.
Single premium variable life insurance may be unsuitable for those who:
• May spend all or most of the money during their lifetime.
• Are passive, low turnover investors who do not need additional tax advantages.
Have a very short-term horizon and would not benefit from long-term tax deferred accumulation.