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Inside Story

What is Single Premium Life Insurance?

Oct 15, 2026, 08:36 AM by Sam Kambol

Learn how single premium whole life insurance works — one payment, guaranteed death benefit, and living benefits. Indiana Farm Bureau Insurance’s policy provides a guaranteed minimum interest rate of 3%, with a current nonguaranteed rate of 4.5%—net of policy expenses.

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Quick answer: Single Premium Whole Life Insurance is a life insurance policy purchased with one lump-sum payment. It provides a guaranteed death benefit from day one—with no additional premiums ever required. The policy also includes living benefits you can access during your lifetime, including cash value accumulation, a nursing home provision and a terminal illness benefit. Indiana Farm Bureau Insurance's policy provides a guaranteed minimum interest rate of 3%,with a current nonguaranteed rate of 4.5%—both calculated after mortality and policy administration expense.**

When most people think about life insurance, they think about monthly payments that continue for years. But there's another option that involves a single payment. With a single premium whole life policy, you make one lump-sum payment, and in return, you get a paid-up policy from day one, providing an immediate death benefit, along with cash value that grows over time and benefits you may access during your lifetime.

At Indiana Farm Bureau Insurance, our Single Premium Whole Life Insurance Policy, is often referred to as the Savings, Inheritance, and Living Benefits (SIL) Policy. It's designed for people who want their life insurance coverage to include options they can use both during their lifetime and beyond.

How does single premium life insurance work?

You make one premium payment. That single payment buys a fully paid-up whole life insurance policy that is guaranteed to never require another premium. From the date the policy is issued, you have an immediate guaranteed death benefit and a policy projected to grow over time.**

The following example is based on a 62-year-old standard non-tobacco male with a $50,000 single premium. Guaranteed values reflect the policy’s contractual guarantees; projected values are based on current nonguaranteed interest rate and policy expenses. Actual results will vary.

Example: How the numbers work

Insured:	62-year-old standard non-tobacco male
Single premium payment:	$50,000
Immediate guaranteed death benefit:	$80,926
Projected death benefit at age 83:	$111,157
Projected cash value at 15 years:	$74,350

If the insured in this example passes away the day after the policy is issued, the beneficiary receives the guaranteed death benefit of $80,926 income tax-free. Based on current nonguaranteed policy assumptions, if the insured lives to age 83, the projected death benefit grows to $111,157.** A death benefit payable at any age passes to beneficiaries income tax-free, regardless of when the insured passes away.

The example above reflects one hypothetical scenario. The actual death benefit payable will depend on a variety of factors. See policy for details.

The three pillars: Savings, Inheritance, and Living Benefits

Savings

Indiana Farm Bureau Insurance's Single Premium Whole Life Insurance policy provides a guaranteed 3% interest rate, with a current nonguaranteed rate of 4.5% — calculated after mortality and administration expenses.** Cash value accumulates on a tax-deferred basis, which means you don't pay income taxes on the accumulation unless you withdraw it.*

If you need income in the future, you may have the option to convert the cash value into a monthly income stream, supplementing your retirement income.* It's still your money.

Inheritance

The death benefit passes to your beneficiaries income tax-free. In the example above, a $50,000 Single Premium Whole Life Insurance Policy provides an immediate guaranteed death benefit of $80,926. Based on current nonguaranteed assumptions, that benefit is projected to grow over time—reaching a projected death benefit of $111,157 if the insured lives to age 83.** This creates a way to leave a meaningful inheritance with life insurance without ongoing payments or complicated investment strategies.

Living Benefits

This is where Indiana Farm Bureau Insurance's policy stands apart. In addition to the death benefit, our policy includes several options to access your policy's value during your lifetime:

Cash Value Surrender: You may surrender the policy partially or fully and receive the cash value as a lump sum, or you may have the option to convert it to monthly income stream for a set number of years.*

Nursing Home Provision: If you require home health care, nursing home care, or assisted living care in the future, you may be able to access your policy's cash through the built-in Nursing Home Provision without a surrender penalty. Exercising this provision may cause some or all coverage to terminate.**

Terminal Illness Benefit: If the insured is diagnosed with a qualifying terminal illness, you have the option to receive nearly all of the death benefit while you are still alive and need it most. Accelerated death benefits paid due to a terminal illness are generally income tax-free.

Is a single premium life policy right for you?

This policy isn't for everyone. The following considerations may help you evaluate whether it aligns with your goals. We encourage you to speak with your Indiana Farm Bureau Insurance agent to learn more.

This policy may be a good fit if...

You want to leave an income tax-free inheritance (via life insurance death benefit) to your loved ones

You prefer guaranteed policy values and protection over higher-risk financial strategies

You have a lump sum available and are looking for a life insurance policy that also builds cash value over time, with features beyond what a savings account or certificate of deposit (CD) provides

You want the peace of mind to know that if life circumstances change, your policy includes options to access cash value

You are at a stage in life where you want guaranteed life insurance protection without ongoing monthly premium payments

This policy may NOT be the best fit if...

You do not have a lump sum available to commit to a single premium payment

You prefer higher-risk, higher-return financial strategies

You need maximum death benefit coverage for the lowest possible cost—in that case, another type of policy may be worth exploring

You anticipate needing frequent or penalty-free access to your funds in the near term without restriction

If this policy is a Modified Endowment Contract (MEC), it may be subject to income tax on gain and a 10% penalty if you are under age 59 ½.*

Interested in learning more?

Your local Indiana Farm Bureau Insurance agent can walk you through the numbers for your specific situation — including the guaranteed death benefit, guaranteed and nonguaranteed projected cash value, and living benefit options available under the policy.

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Frequently asked questions about single premium life insurance

What does "single premium" mean?

It means you make one lump-sum payment to purchase the policy. No monthly, quarterly or annual payments are required afterward. The policy is fully paid up from day one.

How much does single premium life insurance cost?

The "cost" is the single premium you choose to pay, and determines the size of your death benefit, cash value, and living benefits. Your local Indiana Farm Bureau agent can show you what different premium amounts would provide based on your age and health status.

Can I access the money if I need it?

Yes. This policy includes several options to access policy values during your lifetime, subject to policy terms and conditions.

Is the death benefit taxable?

Cash value growth is tax-deferred, meaning taxes on any gain are generally not due unless you withdraw or surrender the policy for its cash value.

What is the guaranteed interest rate?

Indiana Farm Bureau Insurance's Single Premium Whole Life Insurance Policy provides a guaranteed minimum interest rate of 3%, with a current nonguaranteed rate of 4.5% —both calculated after mortality and administration expenses.** The current rate is subject to change, but the 3% minimum is guaranteed and is locked in for the life of the policy.

How is this different from a certificate of deposit (CD) or savings account?

Unlike a CD, a single premium life policy provides a death benefit (often significantly more than the premium paid), tax-deferred growth, and living benefits like nursing home access and terminal illness provisions. A CD only provides interest on the deposited amount with no death benefit or living benefit features.

A single premium whole life insurance policy and a CD or savings account serve different purposes and have meaningfully different features. Some key differences include:

Feature	Single Premium Whole Life	CD / Savings Account
Death benefit	Yes—immediate guaranteed death benefit	No
Cash value	Tax-deferred; gain taxable upon distribution	Interest is generally taxable each year
Living benefits	Nursing Home Provision; Terminal Illness Benefit	No
Liquidity	Subject to policy provisions and tax treatment	Generally accessible; CD withdrawal penalties vary
Principal protection	Guaranteed cash values per policy terms	FDIC insured up to applicable limits

These products have different purposes, features, costs, and tax treatment. This comparison is a general summary only and may not reflect all factors or your specific circumstances.

Can I cancel the policy later?

Yes. You can surrender the policy at any time and receive the cash value, subject to policy terms and applicable tax treatment. If your circumstances change, you remain in control of your money.

* Tax treatment of life insurance policy distributions depends on individual circumstances and the tax classification of the policy. This policy may be classified as a Modified Endowment Contract (MEC) under Section 7702A of the federal Internal Revenue Code. If this policy is classified as a MEC, distributions — including withdrawals, loans, and surrenders — are generally subject to income tax on a gain-first basis, meaning any gain in the policy is taxable before you recover your cost basis. A 10% federal tax penalty may also apply to taxable distributions if you are under age 59½ at the time of distribution. If this policy is not classified as a MEC, different tax rules apply to distributions. A death benefit paid to beneficiaries is generally income tax-free under current federal income tax law regardless of MEC status. Accelerated death benefits paid on account of a qualifying terminal illness are generally income tax-free under current federal income tax law when applicable conditions are met. Tax laws are subject to change.

** The Savings, Inheritance, and Living Benefits (SIL) Policy is a Single Premium Whole Life Insurance policy issued by United Home Life Insurance Company, dba Indiana Farm Bureau Insurance. The policy provides a guaranteed minimum interest rate and guaranteed death benefit. The current interest crediting rate of 4.5% is non- guaranteed, calculated after mortality and administration expenses, and is subject to change. All projected values — including projected death benefit amounts and projected cash values — are based on the current nonguaranteed interest crediting rate and are not guaranteed. Only values specifically identified as guaranteed reflect contractual obligations of United Home Life Insurance Company. Exercising certain policy provisions or benefits, including but not limited to the Nursing Home Provision and Terminal Illness Benefit, may cause coverage to terminate or reduce. This material does not amend, modify, or supplement any insurance policy. See policy for complete details.

Inside Story is for educational and informational purposes only. Inside Story is compiled from various sources, which may or may not be affiliated with our family of companies, and may include the assistance of artificial intelligence. While we strive to provide accurate and reliable content, we make no warranties or guarantees about its completeness, accuracy, or reliability, and are not responsible for the content of any third-party sources or websites referenced herein. The inclusion of any content does not establish a business relationship or constitute our endorsement, approval, or recommendation of any third party. Testimonials and examples provided are for illustrative purposes only and do not guarantee future or similar results or outcomes, and may not consider individual circumstances, goals, needs, or objectives. Inside Story does not provide legal, tax, or accounting advice. For individual guidance, please consult a qualified professional in the appropriate field.

Coverages subject to policy terms, conditions, and exclusions. Subject to underwriting review and approval.

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*Securities & services offered through registered representatives of FBL Marketing Services, LLC, 225 South East Street, Indianapolis, IN 46202, 317-692-7628, Member SIPC. FBL Marketing Services, LLC, is not affiliated with Indiana Farm Bureau, Inc. or United Farm Family Life Insurance Company.

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