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Single Premium Term Insurance

There are millions of people who die unpredictable and sudden death due to disease, calamities, or accidents every year. Especially the death of a bread-earning member of a family can have a devastating financial and emotional impact on the family. Although you cannot predict it but can at least try to limit the impact. Single premium term Life Insurance is among the most availed of financial plans in the market. As everyone wants to secure the future of their family, surely you would want the same! The content of this blog will be dedicated to a single premium term plan.

 

What is a Single Premium Term Insurance?

Before understanding the concept of a single premium term insurance, you need to comprehend the term insurance. In the case of the death of the insurer, an amount that is pre-decided is provided to the nominee by their respective insurance company. However, the insurer must maintain the order that not even a single premium should be missed. It is considered among the simplest types of insurance.

You can either pay the amount on a regular basis or choose a single premium term insurance plan. In a single premium term insurance, an option of paying the premium at once in a lump-sum value is made available for you. In this policy, in exchange, you'll get insurance coverage for a lifetime. As you don't have to worry about the lapsing due to the non-payment of premium, this insurance plan becomes even more convenient for you.

What is the Best Time to Opt for a Single Premium Term Insurance Plan?

If the source of your income keeps on fluctuating then a single premium term plan is a suitable plan for you. Since premium plans are a long-term obligation, it will be arduous for you to carry them for a longer period. Therefore, the most affordable and beneficial plan for you would be the single premium term life insurance where you have to pay the premium amount all at once. However, the amount you need to pay is quite hefty. So the most ideal scenario for you to purchase a single premium term life insurance is:

  • When you have a considerable fund with you which you are planning to utilize.

  • You have got a hefty amount as a gift.

  • Or, you have earned gains in your business.

Benefits of Single Premium Term Insurance Plan:

There are some benefits to equipping yourself with a single premium life term insurance policy. Those benefits are elaborated below:

  • Purchase and Forget -

Once you have done all the processes of a single term insurance policy then you don't have to bother yourself for monitoring the regular payment of insurance. You just have to pay the amount at a time and the policy will be activated until the end of the term policy. But whereas in a regular insurance policy if you fail to pay even a single premium you won't be able to claim any coverage for your future.

  • Hassle-free Life -

Single premium term insurance policy ensures the financial security of your family even when you are not present. With the copious amount paid in the form of a premium, you and the members of the family are isolated from all complications of the insurance policy. In case of unfortunate events, you just need to file or issue a claim. You can even use this policy as collateral if you avail of any loan and establish an asset while you are paying the premium of your plan.

  • Tax Exemptions and Benefits of a Single Premium Term Insurance-

Single term insurance policy provides you with a host of tax benefits. Under Section 80C of the Income Tax Act of 1961, the premium that you pay for the insurance policy is completely eligible for the deduction till Rs. 1.5 Lakhs. Under the 10D Section of the law of Income Tax, the benefits of the death provided by an insurance term policy are exempted from the tax. According to this act, the total premium of the year shouldn't be exceeding 10% of the assured sum.

Conclusion

A single premium term life insurance can also be beneficial for you if you are planning for the security of your future but are unable to carry out the commitments for their long-term insurance policy. In a term insurance plan, you need to pay the amount at once but the amount is quite expensive in comparison with the regular premium insurance. To ensure the security of you and your family, avail of a Term Insurance at Finserv MARKETS that comes at competitive interest rates and a hassle-free application procedure.

Term Insurance Covers and Requirements

Read More About Term Insurance

Government Life Insurance Schemes

FAQs on Single Premium Term Insurance

✔️What benefits will I get on the maturation of my term plan?

There won't be any benefits for you as there is no maturation in this policy. The only benefit that you can avail of in this policy is the death benefit. Using this benefit, your loved ones will gain an assured sum in case you encounter any unfortunate event. 

✔️Will the amount of my premium change during the tenure of the policy?

No. After the policy is issued the amount remains the same throughout the entire tenure of the policy. This is also dependent on the regulation of the tax declared by the Indian Government.

✔️How much life cover should I purchase in a term plan?

There is a common formula to comprehend how much life cover you must equip yourself and your family. The formula is:

Minimum Amount of Sum Assured = (Annual Income x 10 times) + (Liabilities/Loans)

✔️Which insurance policy is the best among the regular premium insurance policy and the single premium term insurance policy?

Both the policies have their benefits. But to decide which one is suitable for you completely depends on your financial condition and the salary type. In other words, if your salary is not fixed, that is if your salary keeps fluctuating every month, then you can go for a single term insurance policy. And if you can afford the premium every month without missing then you can opt for the regular premium insurance. 

✔️Will the plan of a premium term bought today change in the future?

Until and unless any such changing clause is mentioned specifically in the offer document, the premium of term insurance will remain the same. 

✔️Can an NRI purchase a term insurance plan?

Yes, NRIs can even buy a term insurance plan but the NRI has to be an Indian resident as the insurance company needs several documents such as address and age proof which must prove that you belong to some Indian place.