An SPL policy could be a good alternative if you are considering long-term care insurance. Long-term care policies tend to have high annual premiums. With SPL insurance you can often access your funds for the purpose of long-term care without paying income tax. If you don’t need it, you don’t have to use it and your benefit can be paid out fully as intended. But if you do need it, it is available to you. Additionally, if you are diagnosed with a terminal illness and have a life expectancy of 12 months or less, many SPL policies will allow you to make withdrawals from your death benefit. 

By paying a large sum up front and fully funding your SPL account, you have more flexibility with what you can do with it. You also have the ability to manage your interest in one of two ways. With a single premium whole life policy, you lock in a set and safe interest rate which is based on the current economy and the insurer’s investment experience. By contrast, a single premium variable life insurance plan gives you more access to the stock market by allowing the policyholder to decide how the premium will be invested. This option carries greater risk and would not be ideal for someone unfamiliar with the market. 

There are also more flexible withdrawal options for a fully funded SPL policy. You can access your funds by withdrawing or taking out a loan against the policy’s cash surrender value. The loan may impact your policy and reduce the value of the benefit amount, but it should return to its initial standing once paid back. By touching the account, you do expose your funds to the IRS which can be costly. You will also face penalties up to 10% for withdrawing funds before the age of 59 1/2.