A 'single-premium whole life' policy is BEST described by which of the following?

Explanation

A single-premium whole life (SPWL) policy is funded with one large lump-sum payment at issue that fully prepays the contract, providing immediate paid-up coverage and substantial cash value. Because the entire premium is paid in year one (far exceeding the level-premium 7-pay benchmark under IRC §7702A), an SPWL is almost always a Modified Endowment Contract — meaning living distributions (loans, withdrawals) are taxed LIFO/gain-first and may carry a 10% penalty before 59½, while the death benefit remains income-tax-free to the beneficiary under IRC §101. Paying exactly one premium each year for the whole of the insured's life describes ordinary continuous-premium whole life, not a single-premium contract. The level term bought with one large initial premium that converts to whole life in the tenth year invents a hybrid product. And restricting the contract to applicants under age 25 is fabricated; SPWL has no special age restriction. The MEC classification is the central planning consideration for SPWL purchases.