Single Premium

  • SPWL - Single Premium Whole Life 
  • The life insurance industry scored a major victory over House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) yesterday as the committee rejected his proposal to sharply cut back one of the few remaining shelters in the federal tax code.
  • Rostenkowski had called for removing the chief tax advantage now available to investors in so-called single-premium life insurance policies, which have been heavily touted by the industry as tax-reduction mechanisms.
  • The cutback the committee adopted still goes further than the industry had hoped, but Rostenkowski and other critics of the policies expressed concern that abuses would continue nonetheless.
  • Before the vote, Rostenkowski called the single-premium policies "an affront to the 1986 act," which removed many tax benefits from the tax code, and "an abuse that must be corrected."

1988 0630 - The Washington Post - Rostenkowski Loses Bid To Get Insurance Tax, by Albert B. Crenshaw - [link]

  • (p151) - Written Statement of the Connecticut Mutual Life Insurance Company
    • Single premium sales grew from 1984 through 1987 from just over $1 billion of premium to just under $10 billion, approximately doubling the sales for each preceding year.
      • More astounding, perhaps, is the fact that single premium sales from a small fraction of new premium for all forms of insurance to virtually rival sales of all other forms of insurance combined - which approximated $10 billion in 1987.
    • More important, perhaps, are the facts cited in the GAO testimony indicating that more than half of single premium sales during 1986 were attributable to stockbrokers.  

1988 0325 - GOV (Senate) - Tax Treatment of Single-Premium Life Insurance, (CSPAN) Single Premium Life Insurance, Max Baucus, (D-MT)  ---  [BonkNote]

  • 1999 - LC - Greenberg v. Life Ins. Co. of Virginia - [GoogleScholar]
    • re: Single Premium Life Insurance Policy
    • 177 F. 3d 507 - Court of Appeals, 6th Circuit, 1999 - Google Scholar 21 years ago -  … Under this second theory, Greenberg and Rossmann contend that Life of Virginia's agent, using misleading policy illustrations, falsely represented to them that no further premium payments would be required for their policies beyond the single initial premium payment ...
  • Another old but little-used product is making a comeback.
    • Single premium whole life insurance (SPWL) with minimal death benefits and current market interest credits is being sold in considerable volume, particularly in the securities brokerage market.
    • Many general agency and brokerage life insurers have also introduced SPWL products recently.
    • SPWL sales have accelerated rapidly since the passage of the Tax Reform Act of 1986.
    • While the Tax Act eliminated or significantly reduced the
      attractiveness of many past popular tax shelters, life insurance was left  relatively untouched.

1987 - SOA - Single-Premium Whole Life Insurance (SPWL), by Gary E. Dahlman, Society of Actuaries - 3p

  • In the early years of Single Premium Life (endowments), producers sold the heck out of them.
    • It took a while before the feds figured out they were being used as tax-shelters.
  • That epiphany led to the resurrection of the decades old debate about taxing the inside build-up in a life insurance contract, a war NAIFA has been fighting since 1913.
  • And won every battle.

2017 0803 - NAIFA-Washington - IFAPAC and MEC, by Richard Ek, NAIFA member since 1975 - [link]