What type of life insurance policy allows the premium to be paid in a single payment?

A life insurance policy that permits the premium to be paid in a single payment is known as a single pay policy. This type of policy allows the policyholder to make one lump-sum payment, which then funds the policy for its entire duration. Single pay life insurance is advantageous for individuals who prefer to avoid recurring premium payments or who wish to make a single investment for life coverage. This can simplify financial planning and provide peace of mind, knowing that coverage is secured without the need for ongoing payments.

In contrast, the other options involve different payment structures. For instance, 20 Pay Life requires premiums to be paid for 20 years, while Life Paid Up at 65 necessitates payments until the insured reaches age 65. Modified Whole Life typically includes a lower premium in initial years that increases after a specific period, meaning it does not involve a single premium payment option. Each of these alternatives signifies a different approach to premium payment and policy funding, thereby highlighting the unique nature of a single pay policy.