The demand for insurance is increasing with the mounting uncertainties in life. Considering the growing demand Insurance companies are now offering a plethora of insurance plans to suit individual requirements and affordability.
Term Life insurance is one such plan that provides financial security to your loved ones in case of your untimely death. You can choose for both, death as well as maturity benefits under term life insurance which has the dual benefit of insurance as well as saving. Survive, the maturity benefits, the premium paid will be reimbursed with add-ons and bonuses if you survive the policy term.
Understanding Single Premium Term Life Insurance?
According to the term life insurance meaning, the insurer will provide you life cover for the period opted only if you pay the premiums regularly. Options for monthly, quarterly, half-yearly and yearly payments are available.
Single Premium Term Life Insurance is a product that will spare you from the ordeal of remembering your premium payment dates for long periods. It provides you with the convenience of a one-time premium payment. It mostly benefits people who have lump sum amounts and who cannot pay premiums regularly.
Advantages of Single Premium Term Life Insurance Plans
Upfront premium payment for the policy term is debatable but has its advantages as well.
- Convenience: You do not have to keep track of premium payments. Pay the premium upfront and be assured of financial security for your family for the policy term.
- Policy Does Not Lapse: In term life insurance plans the policy lapses if you fail to pay premiums regularly. Whereas in single premium term life insurance plans the chances of policy lapse are very bleak.
- Tax Benefit: The premium paid is eligible for tax deduction under 80C of the Income Tax 1961 as long as it does not exceed 10% of the sum assured. This benefit is available only under the old tax regime. The same benefit applies to deduction under Section 10 (10D) wherein the death claim payout may be exempted from tax.
Making The Choice
Is the single premium insurance plan for all? Who should be making the choice? The plan is a perfect choice for the following:
- Busy Person: If you have a busy schedule and cannot take up the long-term commitment of paying premiums, the upfront premium payment option is the best for you. You will not have the tension of missing out on premium payments and the policy lapsing.
- Irregular Income: Salaried persons normally go for premiums spread out for the entire term. If your income is not as regular as a salaried person, the chances of missing premium dates or even the grace period are high. With a one-time premium payment when you have enough funds, the chances of policy lapse are remote and you can have continued coverage till the policy term.
- Having Lumpsum Amount: A lumpsum amount can be invested in many ways. But if the financial security of your loved ones is your priority, a single premium term life insurance plan will ensure lifetime security without having to worry about the policy lapse.
- Economical: The premium is much lower compared to the term insurance plans with premiums spread over the policy term.
List of Best Single Premium Term Life Insurance Plans
Some of the term life insurance plans with single premium payment options you can choose from are:
Bajaj Allianz Life Fortune Gain
This is a single premium insurance-cum-saving plan. It is a single premium unit-linked savings plan. The single premium paid will be invested in the market as per your portfolio preference and risk appetite. 99.5% of the premium paid will be invested towards creating wealth for you.
Bajaj Allianz Life Smart Protect Goal
This plan provides both, single premium as well as multiple premium options. It provides a comprehensive life cover and is easy on your pocket. You can opt for death as well as maturity benefits along with riders like accidental death benefits and critical illness benefits. The entry age for the policy is between 18 years to 60 years with the return of the premium option and between 18 to 65 years without the return of the premium option.
Bajaj Allianz Retire Rich Plan
This plan has regular, limited, as well as single premium payment options. This option has to be exercised at the time of purchasing the term life insurance plan. The plan provides for paying the Guaranteed Vested Benefit at 101% of the premium paid. You will have the option to withdraw 1/3rd of the vesting benefit in lumpsum and invest in the residual amount in the annuity plan or invest 100% of GVB in annuity plans. If you are below 55 years of age on the vesting date you can either invest the entire amount in an annuity plan or extend the deferment period. The entry age for this plan is between 30 years to 73 years.
Conclusion
A single-premium term life insurance plan is beneficial if you have a lump sum amount to pay the premium upfront. This option suits individuals who do not prefer the commitment of paying premiums throughout the policy term. Also, a single premium turns out to be more economical than multiple premium payments. At the end of the day, the choice depends on individual preferences.