What is a common feature of single premium life insurance?

What is a common feature of single premium life insurance?

• A. Flexible premium payments
• B. Immediate cash value
• C. Low initial premium
• D. Renewable coverage

Answer: (B)

A common feature of single premium life insurance is the immediate cash value. In single premium life insurance policies, the policyholder pays a one-time premium that provides immediate coverage and builds cash value from the start. This is significant because it allows policyholders to access the cash value sooner than with other types of policies, where it may take time for cash value to accumulate. The immediate cash value can be advantageous for those looking for a stable investment component within their life insurance. On the other hand, flexible premium payments are characteristic of universal life insurance rather than single premium policies, while low initial premium is more typical of term life insurance. Renewable coverage is generally associated with term life insurance policies, where the coverage can be renewed after the term expires. Thus, immediate cash value is a defining aspect of single premium life insurance, making it the correct answer.

A common feature of single premium life insurance is the immediate cash value. In single premium life insurance policies, the policyholder pays a one-time premium that provides immediate coverage and builds cash value from the start. This is significant because it allows policyholders to access the cash value sooner than with other types of policies, where it may take time for cash value to accumulate. The immediate cash value can be advantageous for those looking for a stable investment component within their life insurance.

On the other hand, flexible premium payments are characteristic of universal life insurance rather than single premium policies, while low initial premium is more typical of term life insurance. Renewable coverage is generally associated with term life insurance policies, where the coverage can be renewed after the term expires. Thus, immediate cash value is a defining aspect of single premium life insurance, making it the correct answer.