When it comes the different types of life insurance products, single premium policies may be recommended for its simplicity and unique benefits. They provide you with a simple and effective way to get life insurance coverage.
What is Single Premium Term Insurance?
A single premium term insuranceis just another type of life insurance policy. In this type of policy, you would have to pay a one-time, lump-sum premium. Unlike regular premium plans which require periodic payments, single premium policies offer a hassle-free one-time payment method. This makes them an ideal choice for those who have received a large gain or who prefer not to worry about recurring payments.
How Does the Single Premium Policy Work?
With a single premium policy, the entire premium amount has to be paid upfront by you. This payment secures coverage for the duration of the policy term, ensuring that beneficiaries receive a death benefit if the insured passes away during this period. The lump-sum premium is calculated based on factors such as the insured's age, health, policy term, and the sum assured. For instance, those seeking a 1 crore term insurance cover would pay a premium determined by this coverage value.
Key Benefits of Single Premium Term Insurance
Here are a few benefits of Single Premium Term Insuranceyou should know:
Convenient Payment
One of the most prominent benefits is convenience. Making a one-time payment eliminates the need for annual or monthly premium payments, reducing the effort on the policyholder’s end.
Flexibility
Single premium policies offer flexibility in terms of investment. Policyholders can often choose from various investment options, allowing them to align their insurance with their financial goals.
Death Benefit
A single premium term insuranceguarantees a death benefit to the beneficiary if the insured passes away within the policy term. This assurance provides financial security to the policyholder’s family, ensuring they are protected against unforeseen events.
Tax Benefit**
In India, policyholders can avail tax benefits under Section 80C of the Income Tax Act. The premium paid for single premium policies is eligible for a deduction, reducing the overall tax liability. However, these deductions only apply if you select the old regime of taxation.
Affordability
While the upfront cost may seem high, a single premium policycan be more affordable in the long run. It bypasses the potential increase in premium costs over time, which can occur in regular premium policies.
Mental Peace
Knowing that a life insurancepolicy is fully paid for can offer significant peace of mind. Policyholders can rest assured that their coverage is in place without the worry of missed payments affecting their policy status.
Utilising Windfall Gain
A single premium policyis an excellent way to utilize a windfall gain, such as a bonus or inheritance. By investing this amount into a life insurance policy, individuals can secure long-term protection for themselves and their families.
How is the Single Premium for Term Insurance Premium Calculated?
The calculation of a single premium involves assessing the insured's age, health, lifestyle, and the desired sum assured. Insurers use a term insurance calculator to determine the exact premium, which can vary significantly based on these factors. For example, a 50 lakh term insurance policy will have a different premium compared to a 1 crore term insurancepolicy due to the variation in coverage amount.
With benefits such as convenient payments, tax advantages, and financial security, single premium policies are an attractive option for those with the means to pay upfront. However, before opting for a single premium term insurance, it's crucial to consider factors such as the policy term, sum assured, and the insurer's credibility. Additionally, potential policyholders should assess their financial situation to ensure they can afford the lump-sum payment without compromising their liquidity.
Single Premium Term Insurance Policy FAQs
Who can get a single premium term insurance plan?
Individuals with sufficient funds to pay the lump-sum premium and who seek hassle-free insurance coverage can avail of these plans.
What types of deaths can a single premium term insurance plan cover?
Usually, both natural and accidental deaths fall under the scope of coverage. However, exclusions such as suicide within the first year, may apply.
How is a single premium term insurance policy cancelled?
Policyholders can cancel their policy by contacting their insurer. Refunds, if any, will depend on the policy terms and the time elapsed since purchase.
How are single premium and regular premium plans distinct?
Single premium involves a one-time payment for the entire policy term, while regular premium requires periodic payments throughout the policy term.
What is the net single premium term insurance?
Net single premium refers to the actual premium amount needed to cover the risk, excluding any additional charges or fees.
How is a single premium calculated?
A single premium is calculated based on factors such as the insured’s age, health, and chosen sum assured, often using a term insurance calculatorfor accuracy.
** Tax exemptions are as per applicable tax laws from time to time.
Customers 
Distributor 
Employee 
