Single premium life is a permanent life insurance policy funded with a single lump-sum premium paid at issue rather than ongoing periodic premiums. The policy provides an immediate, fully paid-up death benefit and often accumulates cash value from day one. Because funding is heavily front-loaded, many single premium life policies become modified endowment contracts (MECs) under Section 7702A, which preserves tax-free death benefits but subjects distributions to less favorable tax treatment. Single premium life is frequently used for wealth transfer, estate liquidity, and legacy planning when the policyowner does not need to access cash values during life. It can efficiently convert taxable assets into a larger, income-tax-free benefit for heirs.

Advisors recommend single premium life for older clients with liquid assets they do not expect to spend, such as CDs or low-yielding brokerage accounts, and who want to create a leveraged inheritance or charitable gift. Illustrations show how a single premium can generate a much larger death benefit than simply leaving the same cash to heirs, especially when health is good. Advisors explain MEC implications and position the policy primarily as a death benefit tool rather than a flexible income source. Ownership structures may include ILITs or trusts to manage estate tax exposure. Understanding single premium life allows advisors to turn idle assets into efficient legacy vehicles while setting realistic expectations about liquidity and tax treatment of withdrawals.