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What is a Single Premium Life Insurance policy? Know Benefits & Features
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What is a Single Premium Life Insurance policy?

A single premium insurance policy is an ideal solution for those who want to pay out for the insurance cover at one go under a personal policy. By paying one premium, the policyholder has the convenience of getting insured for an agreed-upon amount for a specific tenure. This type of facility is available in major types of insurance plans like term insurance, endowment plan, etc.

It is seen that many individuals would like to take up single premium life insurance policies but do not have the know-how. You will often come across various tips on the internet via blogs and other online platforms stating that you should first buy a regular premium policy and then upgrade it later on. This will eventually lead to an increase in the total premium amount. If you do not want to pay for this, all you need to do is take up a single premium insurance policy instead of getting one with regular payments. 

Why Choose a Single Premium Policy? 

Suppose you are someone who is interested in purchasing an insurance policy but has problems with the idea of making regular premium payments. In that case, this simple feature could be the solution for you. After your premium payment, you will become the owner of a policy with specific benefits. Your loved ones will receive the benefits of the policy in case of your demise during the policy term as no further premium contribution will be required.

You can rest easy knowing your family is protected. Using this mode of premium payment amount depends on the individual’s capacity and does not require any medical screening. You don’t have to worry about missing any premium payments or the policy lapses due to non-payment.

When should you buy a single premium policy? 

Buying a single premium life insurance policy is most preferred by the people who have a lump sum amount with them. This kind of facility is available in all forms of life insurance plans. The main objective of having this feature is to secure your family against sudden calamities or accidents by paying upfront.

A single premium policy is quite popular in India, and there are good reasons for it. With single premium policies, you can select your insurance coverage amount and pay for it at one go, that too without any medical tests or at least with just a physical check-up. You can also choose your length of term for this policy, which can be anywhere between 10 to 30 years or even for your lifetime.

Top 4 Advantages of Buying Single Premium Policy in India

  1. Protection of wealth against taxation
  2. No more policy lapse
  3. Premium Cost
  4. Income Tax Benefits


1. Protection of wealth against taxation

Life insurance is a good financial planning tool that lets you plan for the future and make sure your loved ones will be taken care of, even if something were to happen to you. A Single Premium Life Insurance policy is designed in such a way to serve both as an investment as well as financial protection. It offers you tax benefits under Section 80C of the IT Act, 1961. After the passage of the Finance Bill 2017, it has been made even more beneficial for the investors. The premium paid towards the insurance policy can be claimed for deduction up to an amount of Rs 1.5 Lakhs under section 80C.

Once you select the best single premium life insurance policy in India, you can be confident of the benefits it offers in one go. Be it your financial independence or your family’s security; a single premium life insurance policy is your best bet. 

2. No more policy lapse

By paying a single premium at the start of the policy, Single-Premium Insurance Policies gives you peace of mind because you don’t have to worry about renewing the policy every year. The best part is, you get to use your life insurance protection for a longer period. In addition, since it’s an indemnity plan, the claim amount will be paid on maturity, thereby giving you increased security.

3. Premium Cost

Compared to regular premium insurance policies, the single premium policies are indeed expensive, but it is important to remember the fact that the premiums do not go on for the rest of your life whereas, in the case of term insurance, you will be protected for a longer period. Therefore, if you can afford the large sum mentioned as premium once and for all, then it can prove better than opting for term insurance with monthly premium payment. Moreover, with the availability of many websites, it is possible to check for the latest single premium term life insurance rates, which will help you choose the right life insurance policy that is affordable and economical.

4. Income Tax Benefits

There are no significant changes between a single premium life insurance policy and a regular paying life insurance policy. The premium paid towards the policy is eligible for a tax deduction under section 80C of the Income Tax Act, and the sum assured paid to the nominee in case of demise of the policyholder is exempt under Section 10 (10D). Even though the premium paid is a single shot, the policyholder is eligible for tax exemption only once during that particular financial year. This means one can buy a new single premium plan every year to utilize the tax benefits fully.

However, the main benefit of purchasing a single premium policy is the fact that it is a fully paid product. 

With single premium Policies, you have the option of buying a stand-alone life insurance policy by paying a single premium. Either you may settle only for that as your sole insurance policy, or you can use it in conjunction with another kind of life insurance policy.

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