Life Insurance
Best Life InsuranceSingle-PremiumOur analysis of single-premium life insurance policy providers found that State Farm, Northwestern Mutual and MassMutual are the best insurers in the U.S. This is based on a comparison using data from J.D. Power, AM Best, NAIC and MoneyGeek affordability scores.
Review our rankings for the best single-premium life insurance providers below.
Best Life InsuranceSingle-PremiumBest Single-Premium Life Insurance Companies in 2023
A single-premium life insurance policy is best for those who can afford it and want the guarantee of a death benefit right away. It is also suitable for those who want to maximize their cash value growth, as the earlier you buy, the more opportunities there are for capital appreciation. The cash value can fund future expenses, such as retirement or college.
Key Takeaways
Single-premium life insurance is a policy where you make one lump sum payment to receive a guaranteed death benefit.
Most single-premium life insurance contracts become modified endowment contracts (MECs), changing how it's taxed to avoid abuse of its cash value tax deferment.
Given that SPLs are essentially one-time-payment life insurance policies, the cost can be astronomical, making this option unsuitable for most consumers.
HOW MONEYGEEK RANKED INSURANCE COMPANIES
To come up with our ranking scores, we incorporated data from J.D. Power, AM Best, NAIC and our own affordability score, which we created by manually gathering thousands of quotes across major providers.
We used our qualitative research data to determine the best single-premium life insurance companies based on each company’s product offering and support features.
Best Overall: State Farm
pros
Ranks high in customer satisfaction and financial ratings
Has a range of products to suit different budget or need levels
Offers quotes online in minutes
cons
Does not offer coverage in Massachusetts
Provides only term life quotes online
Allows changes to your life insurance through an agent or by mail
COMPANY HIGHLIGHTS
MoneyGeek ranks State Farm as the best overall life insurance provider for both single-premium life insurance policies and traditional policies as a whole. This is based on our analysis of the company’s overall financial stability, customer satisfaction and overall ratings, including affordability.
State Farm scores high across categories, ranking first in customer service, claims handling, product offerings and financial stability.
Product Offering
Within its life insurance vertical, State Farm offers a wide selection of product types. There are policies for any need, from standard term life, whole life and universal insurance to single-premium and final expense life insurance.
State Farm offers single-premium life insurance to individuals between the ages of 0 and 80 with a minimum coverage amount of $15,000. This policy includes a guaranteed cash value that grows tax-deferred, which can be paid in dividends or withdrawn later.
Beyond life insurance, State Farm also offers a variety of other insurance types, such as auto, home, business, health, disability and liability insurance. Its range of products makes it one of the biggest insurers in the U.S.
Support Features
State Farm offers quotes online for some of its insurance products, but not all. For instance, it has quotes for term life insurance policies, but you must contact an agent for other types, such as whole life or single-premium life.
Policy Types Offered
- Final expense
- Term
- Whole life
- Universal life
Runner-Up: Northwestern Mutual
pros
Ranks high in customer satisfaction and financial stability
Has a low customer complaint ratio
Offers dividends for all policy types
cons
Does not offer quotes and applications online
Requires most applicants to undergo a medical exam
Has limited financial resources online
COMPANY HIGHLIGHTS
Given its low customer complaint ratio and above-average scores across MoneyGeek’s metrics, our analysis ranks Northwestern Mutual as the second-best provider for single-premium life insurance policies and the best provider for whole life insurance policies.
Northwestern Mutual is well-known for its financial planning services more so than its financial products and is the second-largest insurer in the world. To combine the concepts of protecting and growing, the company emphasizes a comprehensive and whole-picture approach that encompasses insurance and investments.
Product Offering
Northwestern Mutual offers a range of life insurance products, including term life, whole life, universal life and variable life. On top of that, the company also offers single-premium life insurance, granted that the policyholder has a minimum coverage of $50,000 and is between the ages of 0 and 75. When the policyholder dies, Northwestern Mutual gives its beneficiaries an option to receive funds in a lump sum or installments, an investment account or a combination of the two.
Beyond life insurance, Northwestern Mutual is popular for its financial planning services, also offering retirement planning, estate planning, college planning and more.
Support Features
To inquire or apply for any of Northwestern Mutual’s life insurance policies, you must fill out its form online and wait to be contacted by one of its financial advisors. Otherwise, the company does not provide a quote or application form online.
Policy Types Offered
- Whole life
- Universal life
- Term life
- Whole life plus
- CompLife
- 65 Life
- 90 Life
Most Affordable: MassMutual
pros
Has a low customer complaint ratio
Offers guaranteed acceptance whole life to those ages 50 to 75
Ranks high in financial stability
cons
Does not offer an online rate calculator
Requires a medical exam for most policies
Does not allow consumers to apply online
COMPANY HIGHLIGHTS
If you’re looking for a balance between cost and customer service, MoneyGeek ranks MassMutual as the most affordable single-premium life insurance policy provider. The company also ranks as the best provider of term life insurance.
MassMutual is a steadily-growing company with a wide range of products and services, consistently ranking among the top 10 largest life insurance companies. With a low customer complaint ratio and high financial stability score, MassMutual serves as one of the best options for those looking for a single-premium life insurance policy.
Product Offering
MassMutual offers a variety of life insurance products, serving policyholders with different needs and budgets. MassMutual offers single-premium life insurance in the form of CareChoice One.
The plan covers long-term care expenses like nursing homes, hospital fees and other medically-related expenses. If long-term care is not required, a guaranteed death benefit is provided. A unique aspect of this policy is its surrender value, which increases over time and is paid out to a policyholder who decides to cancel their policy.
Support Features
If you are interested in a single-premium life insurance policy from MassMutual, you must contact an agent by filling out a form online. However, the company does offer quotes for term life insurance online.
You may qualify for non-tobacco rates if your tobacco usage involves no more than 24 cigars a year and you have a negative urinalysis specimen.
Policy Types Offered
- Direct term
- Healthbridge program term
- Lifebridge program term
- 10, 15, 20, 25 and 30-year term
- Whole life
- Universal life
- Variable universal life
What Is Single-Premium Life Insurance?
Single-premium life insurance provides a guaranteed death benefit to your beneficiaries in exchange for a single lump sum payment. Unlike traditional policies, which are paid in monthly, quarterly, semi-annual or annual installments, SPL is a one-time payment life insurance policy.
A single-premium life insurance policy is a type of permanent life insurance, but some providers offer a term life version. Permanent policies include a cash value that grows over time, which you can borrow against to help with college, retirement or other financial goals.
MONEYGEEK DICTIONARY
The nature of single-premium life insurance policies automatically makes them modified endowment contracts (MECs). A MEC is a different type of tax structure given to policies with funding that has exceeded federal tax limits, which can prevent the abuse of tax advantages commonly seen in permanent life insurance.
Once a policy is classified as a MEC, it is subject to a 10% tax penalty along with any income taxes on the withdrawal if made before retirement age (59 ½ years old).
Should You Get Single-Premium Life Insurance?
A single-premium life insurance policy does not suit everyone, as the high cost may be difficult to afford. However, it still depends on your situation. If you are estate planning or have a trusted financial advisor or attorney who can maximize your policy, then single-premium life insurance policies are a good option.
Conversely, a single-premium life insurance policy may not be a good idea if you want to add to your investment continuously because you only pay once. If you only have enough to meet the minimum, you may want to hold off or opt for a traditional policy.
At the end of the day, whether you decide to get single-premium life insurance will depend on your situation. Below are a few scenarios or reasons to get single-premium life insurance:
Your Financial Advisor Recommends It
If you have a financial advisor who recommends getting a single-premium life insurance policy, it might be worth considering. They have an overview of your finances and the expertise to determine whether it’s a good idea for your estate and future.
You Have Enough Money
If you have enough pay to pay for a single-premium life insurance policy, you may want to purchase it. This way, you can have a guaranteed death benefit immediately instead of waiting for a certain period or a number of payments.
You’re Okay With the Tax Implications & Restrictions
Single-premium insurance policies are taxed differently than traditional policies, which can mean hefty fees and tax implications if you withdraw funds earlier than maturity.
You Are Fully Committed
If you are intent on getting a death benefit right away to ease your mind and ensure the financial security of your loved ones, you may want to get single-premium life insurance.
You Want a Source of Funds for Long-Term Financial Goals
You can withdraw from your single-premium life insurance policy after a certain period, helping you pay for retirement, a child’s college fund or emergency expenses, but keep in mind that it will decrease your death benefit.
MONEYGEEK EXPERT TIP
While single-premium life insurance is convenient because of its one-and-done nature, term life insurance may be the better choice if you are looking for affordability and effectiveness. This type of insurance ends after a specified period. Still, you can maintain a high benefit at a more affordable rate than whole life or single-premium life insurance.
Review MoneyGeek’s analysis of the best term life insurance providers to find a company that balances cost and quality of service.
Compare Life Insurance Rates
Ensure you are getting the best rate for your insurance. Compare quotes from the top insurance companies.
Frequently Asked Questions
If you’re still confused about how this policy type works, review some frequently asked questions on single-premium life insurance policies below.
Life Insurance
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