Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
With a single-premium whole life policy, the policyowner:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A single-premium whole life policy is fully paid up with one lump-sum payment at issue. Because the entire premium is paid immediately, the policy builds cash value quickly and no further premiums are due. It is often used for estate planning and gifting because the large one-time transfer creates an immediate paid-up estate. Careful attention to Modified Endowment Contract (MEC) rules is warranted because the heavy upfront funding can exceed the 7-pay limit.
Why the other options are wrong
- B) Twenty annual premium payments describe a 20-pay life policy, a limited-pay structure, not a single-premium contract.
- C) Increasing annual premiums describe renewable term coverage priced at attained age, not a single-premium permanent policy.
- D) Premiums tied to employment describe group or salary-deduction plans; a single-premium policy is paid once at issue regardless of employment.
Memory hook
Single premium = one check and the policy is bought and paid for. Cash value starts the moment the ink dries.