Wealth Transfer is the transfer of wealth to beneficiaries in the event of your death in a tax-advantaged manner. This is achieved through the use of financial retirement planning, including estate planning, life insurance, wills, and trusts, in some cases.

When it comes to wealth transfer, most senior citizens want assurance that their assets will be safely passed down to their loved ones at the highest interest rate earned and lowest tax rate throughout the life of the financial product. In this case, Single Premium Life Insurance may be one of the most efficient and valuable wealth transfer instruments available for retirees.

Why Should You Consider a Single Premium Life?

At Bobetich Retirement, there are different types of life insurance products from which you can choose, including Universal Life Insurance, Indexed Life Insurance, or Whole Life policies. Many people, who choose to buy these policies, are middle-class and do not require complex estate planning. Regardless of how big or small your estate is, though, income taxes can still deplete your funds.

Single Premium Life products are able to benefit from the existing tax laws. They provide the insured person with an immediate benefit that can help increase the size of the estate. In the event of your death when these funds are passed to your beneficiaries, the funds will be federal income tax-free and will bypass probate.

Is Single Premium Life Product A Good Option For You?

If you are between 55 and 85 years of age and have funds set aside for your future generation, then a Single Premium Life Product may be a great option for you. If you are conservative and would rather have a guaranteed sum, then Single Premium Life insurance is also right for you.

Since this is a type of life insurance, you will need to meet certain requirements like having generally good health and other underwriting concerns. However, you may also be able to access these products as a “simplified” issue and not need to take a medical exam.

When considering Single Premium Life, you should use the cash that you do not need to use immediately. One of the questions you need to ask yourself is the purpose of the funds that you have accumulated. If the purpose is to pass all or some part of the funds to your future generation, then you may be an excellent candidate for Single Premium Life. If you have Certificates of Deposit, passbook saving accounts, or older fixed annuities, then a Single Premium Life product may also be a good instrument to pick. In addition, if you have funds you do not use because you have another source of income, then you can also choose Single Premium Life.

Another important consideration to take note of is that interests on passbook savings accounts and CDs are taxable, which will decrease the legacy that goes to your beneficiaries. If you have deferred annuities that will go to your children when you pass away, they also have a tax time bomb that could disrupt the funds, since the basic purpose of annuities is to provide a steady stream of income for the policyholder, not his or her beneficiaries. Therefore, all the accumulated interest earned over the year will be passed down to your heirs, which means the longer your annuities accumulate cash, the more taxes your heirs will need to pay.

Moreover, since the income tax will be calculated based on your heir’s income bracket, it might be higher than yours, which means the accumulated amount of tax will be significantly high. For people who do not expect to use all their money for their income, Single Premium Life can help get rid of these cumbersome taxes.

In addition to providing a death benefit that is many times higher than the initial single premium, you can also draw all or part of your death benefit to pay for your nursing home care and home healthcare services.