With a single-premium whole life policy, the policyowner:

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.

Why A is correct

A single premium whole life policy is purchased with one lump-sum payment at issue, so the policy is fully paid up and no further premiums are due while the death benefit continues for life or to maturity. It is one of the recognized premium payment patterns, along with level premium, limited-pay, and modified premium designs. Because the entire premium is paid up front, the policy builds cash value immediately and there is no ongoing premium obligation. It is often used where a client has a large amount of cash and wants permanent coverage without future payments. The death benefit remains income tax free under IRC Section 101(a), as with other life policies.

Why the other options are wrong

• Level premiums paid for a fixed number of years describe a limited-pay whole life policy, in which the owner pays for a set period but coverage continues for life; that is not a single premium design.
• Increasing annual premiums describe annually renewable term coverage, where the premium rises with attained age; a single premium policy has no future premiums at all.
• Paying premiums until age 65 with coverage continuing to age 100 describes a life-paid-up-at-65 limited-pay design, not a single premium policy.

Memory hook

Single premium = one check and the policy is paid for life. Set it and forget it.

Why A is correct

A single premium whole life policy requires one lump-sum payment at issue. Because the entire cost is paid up front, the policy is fully paid up immediately, permanent coverage continues for the insured's lifetime, and the policy builds immediate cash value. This is a distinct premium pattern under objective LIFE-II.B.3, contrasting with continuous-pay, limited-pay, and modified-premium plans.

Why the other options are wrong

• B) Lifetime premium payments describe a continuous-premium (level premium) whole life policy, not a single premium plan.
• C) Paying premiums for a limited number of years describes limited-pay whole life, not a single payment.
• D) Term insurance is temporary coverage, not permanent, and is not what a single premium whole life policy provides.

Memory hook

One check, paid up forever. Single premium = instant permanence.