Understanding Single Premium Term Insurance In Detail

The prevalence of insurance has risen dramatically in recent years. Insurance companies are responding to growing consumer demand by introducing plenty of new term insurance options.
The single premium term insurance plan is one of the various products available in India that can help you safeguard your family's future and ensure that they achieve their life goals. Continue reading to learn more about single premium term insurance policies, their benefits, and when they should be used.

What is a Single Premium Term Insurance Plan?

A single premium term insurance plan is a type of life insurance that only needs you to pay a single premium in exchange for coverage. This eliminates the need to make regular premium payments while still allowing you to benefit from the term insurance policy's life insurance coverage. You get a lot of convenience with a single premium term plan (one time term insurance plan) because you only have to pay the premium once during the course of the policy's duration. With this sort of insurance plan, you can simply purchase the policy and rest, knowing that the coverage will not lapse due to non-payment of payments.

Must Read: Understanding How A Term Insurance Plan Works?

Who Should Purchase a Single Premium Term Insurance Plan?

Single-premium term insurance policies come with several advantages. Choosing this form of term life insurance can be especially beneficial if you find yourself in any of the following scenarios.

• People With Fluctuating Income - In India, term insurance plans aren't just for salaried people. A good example is a single-premium term insurance plan. In fact, because you are not obligated to make regular premium payments, you are more likely to benefit from this form of term life insurance plan if you have irregular income.
• People With Busy Schedule - Regular term insurance plans require you to pay premiums on a monthly, quarterly, half-yearly, or annual basis. You may find it difficult to keep track of the due dates for these premium payments if you have a hectic schedule. Furthermore, if you fail to pay your premiums on time, your term insurance coverage may expire.
  With single premium insurance plans, however, all you have to do is buy the policy and sit back and relax. It allows you to take a buy-it-and-forget-it attitude toward insurance products.
• People With a Lump Sum Amount - When you have a large lump sum of money, one of the best things you can do is invest it in a single premium term plan. Investing in these types of term life insurance plans is a terrific way to put your idle money to good use, whether you get a lump sum amount as an inheritance, a bonus, or windfall income from your business.

What are the Different Benefits of a Single Premium Term Insurance Policy?

Some of the advantages of single premium term insurance plans are briefly discussed below.

1. No Policy Lapsation - You won't have to worry about keeping track of your coverage or making sure you're paying your premiums on time with single premium term insurance. Only one payment is required, and the policy stays valid until the conclusion of the policy term. If you miss a premium payment on a typical term insurance plan, the insurance company will usually grant you a grace period to make up the difference. The coverage will lapse if you do not pay or miss a payment after the grace period has expired. An expired term insurance policy is useless since the claim will be denied if your family requires it while you are away.
2. Tension-free Life - Your family is protected from the policy's complications by paying the premium in one single payment. In the event of an unexpected situation, they only need to file a claim. Since you obtain an asset when you pay the premium for the policy, single-premium term insurance can also be used as collateral in the event you need a loan.
3. Tax Benefits - The premium paid for term life insurance is deductible under Section 80C of the Income Tax Act of 1961. In addition, tax benefits are available for death benefits under Section 10 (10D) of the Income Tax Act of 1961.

Take Away

Even if you die unexpectedly, single premium term plans can assist your family in reaching their life goals without difficulty. Moreover, before choosing a single premium term insurance plan, like with any insurance policy or investment option, it is always a good idea to review the policy's features and benefits, as well as compare the plans available.

Also Read: Do I Need a Term Insurance Plan If I Don't Have Dependents?

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