In recent years, the penetration of insurance has increased tremendously. Giving into the increased demands of consumers, insurance companies are bringing in a plethora of new term insurance plans.
Among the many term insurance plans in India, the single premium term insurance plan is one of the many products with which you can secure your family’s future and ensure that they meet their life goals. Read on to find out more about single premium term insurance plans, their benefits, and when to opt for them.
What is a single premium term insurance plan?
As the name itself implies, a single premium term insurance plan is an insurance product that requires you to pay only a one-time premium in exchange for life insurance coverage. This eliminates the need to pay regular and periodic premium payments, while still allowing you to have a life cover under the term insurance policy.
Since the single premium term insurance plan mandates that you only pay the premium amount once during the entire tenure of the policy, you get to enjoy a great deal of convenience. With this type of an insurance plan, you can simply purchase the policy and relax, since you will not have to worry about the policy lapsing due to non-payment of premiums.
When should you opt for a single premium term insurance plan?
Single premium term insurance plans possess plenty of benefits. Opting for this type of term life insurance can be particularly advantageous when you are faced with any one of the following situations.
• If you have an irregular income
Term insurance plans in India are not designed only for salaried persons. The single premium term insurance plan is a case in point. In fact, if you are a person with irregular income, you are more likely to benefit from this type of a term life insurance plan since you are not required to make regular premium payments.
• If you have a busy schedule
With regular term plans, you will need to pay premiums periodically, on a monthly, quarterly, half-yearly or on an annual basis. Having a busy schedule may make it harder for you to keep track of the due dates for these premium payments. Moreover, in case you forget to pay premiums on time, you run the risk of your term insurance policy lapsing.
However, with single premium term insurance plans, all that you need to do is purchase the plan and relax. It enables you to adopt the buy it and forget it approach to insurance policies.
• If you have a lump sum amount
Investing in a single premium term insurance plan is one of the most prudent ideas when you are in possession of an idle, lump sum amount. Whether you receive a lump sum amount as an inheritance, as a bonus, or as windfall gains from your business, investing in this type of term life insurance policies is a great way to put your idle money to good use.
What are the benefits of a single premium term insurance plan?
Overall, there is absolutely no doubt about the fact that a single premium term insurance plan offers plenty of benefits. Some of these term insurance benefits are briefly explained below.
• It eliminates the chance of policy lapses
In addition to removing the hassle of trying to keep track of your periodic premium payments and allowing your family to meet their life goals if you’re not around, these term life insurance plans completely eliminate the chances of your policy lapsing. Since the premium payment is made up front, you don’t have to worry about making regular payments on time, and your term insurance policy stays active till the end of its tenure.
• It offers tax benefits
Under Section 80C of the Income Tax Act, 1961, the premium paid for term life insurance is eligible for deduction. Furthermore, maturity benefit, death benefit and surrender benefit are eligible for tax benefits as per Section 10 (10D) of the Income Tax Act 1961. The above deductions and exemptions are subject to the provisions stated in the Income Tax Act 1961
Single premium term plans can help your family achieve their life goals without any trouble, even in case of your unfortunate demise. As with any insurance policy or an investment option, before choosing a single premium term insurance plan, it is always a good idea to examine the features and benefits of the policy, and to compare the plans available before opting for one. Now that you are aware of everything there is to know about single premium term insurance plans, all that you need to do is go ahead and get one for yourself.