Once a popular tax shelter, the single premium whole life insurance policy has fallen into disuse. However, it could be an easy way to make sure you have a life insurance policy without having to remember to make payments every month.

What Is a Single Payment Whole Life Policy?

A single payment whole life policy is a “one-and-done” approach to life insurance. Where most policies would have you paying a monthly premium, and cut off your insurance benefits if you let payments lapse, the single payment policy requires just that — a single payment of a large lump sum, typically upwards of $15,000. You’ll earn a fixed amount of interest on the money you invest.

The single lump sum payment may put this type of policy out of reach for many people. However, if you have a lump sum, this could be one way to invest it for the benefit of your beneficiaries. The lump sum allows interest to accumulate quickly because the policy is fully funded.

Some single payment life policies allow you to withdraw money tax-free to pay for long-term care expenses that may arise. Check with the insurance company to see if that’s the case in their policies before you decide on the best policy for you.

If you have a large amount of money, a single premium whole life insurance policy could be an excellent vehicle for you to provide for your heirs after you pass on. Consult your financial advisor to see if this investment makes sense for you.