Single Premium Term Insurance

Written by : Knowledge Centre Team

2023-05-09

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Single premium term insurance is a type of life insurance policy where the policyholder pays in lump sum while buying the coverage rather than making regular payments over the term. Insurance plans can provide numerous financial benefits to help achieve financial goals by safeguarding against potential financial losses. Different type of insurance plans offer distinct features that cater to the specific financial needs and goals. Term insurance is one of the most preferred forms of insurance policy that offer a death benefit to the beneficiary if you pass away within the policy term.

Benefits of Single Premium Term Insurance

Single premium term insurance can offer the convenience of a one-time payment. It may be a suitable option for individuals who have a lump sum of money or who are uncertain about their ability to make regular premium payments.

By making a single lump sum payment at the outset of the policy, you can secure coverage for the specified term and provide financial protection for your loved ones without worrying about missing the premium payment dates.

Listed below are a few benefits of buying a term insurance plan with a single premium payment:

Convenient as you can avoid the hassle of making regular premium payments throughout the policy term.
Policy will not lapse once you make the payment. The policy continues to be in-force for the specified term.
Affordable as single premium term insurance policies are typically less expensive as you pay the entire premium upfront.
Comes with tax benefit under the Income Tax Act. The premium paid for the policy is eligible for deduction up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. The death benefits paid by a term insurance policy are tax-exempt under Section 10(10D) of the income tax law. The premium in a year should not exceed 10% of the sum assured. If the premium is more than 10% of the sum assured, only the premium equal to 10% of the sum assured is eligible for deduction.

Who should Buy a Single Premium Insurance Plan?

A one-time premium plan or a single premium plan requires a large upfront payment. Therefore, it is bought when you have considerable amount of money for the purpose. It could be worth for people who wish to achieve financial security but do not wish to buy market-linked products. So, in a nutshell, anybody who has surplus cash and are not confident committing to recurring premium payments for long durations can buy a single premium insurance policy.

How do Single Premium Insurance Plans Help?

iSelect Smart360 Term Plan is more than a regular term insurance plan, with a single bullet payment; you can customize the plan to your choices. You get a life cover, option to add your spouse, cover against 40 listed critical illnesses, block your premium feature, along with tax advantages.

A single premium term insurance plan can be a viable option for people planning a secure future for their family but do not want long term commitments. When you consider a term plan with single premium payment, it can have both advantages and disadvantages over a regular payment plan. However, both these payment modes offer similar benefits under a policy, so your actual decision should depend on the cash flow situation and your compatibility with the insurance provider.

With a growing focus on ease of transaction for the customers, the insurance industry has been innovating every day. They have been introducing innovative and flexible plan options for the customers. A single premium insurance plan may help you save money in the long run, however, you need to take this financial decision after deliberation. If you are salaried, it is better to weigh the pros and cons of paying the money in a lump sum.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.