Transamerica Unit No. 1A, Third Floor, Building No.3, NESCO IT Park, Western Express Highway, Goregoan (East), Mumbai 400 063, India +91 22 65270195 100

TomorrowMakers ™

Insurance Basics

Taylor & Francis Group

All you need to know about single premium life insurance

Want to get over with buying an insurance policy at one go because you have some money lying idle? A single premium insurance policy is just the thing for you then.
 

By Gargi Banerjee

Want to get over with buying an insurance policy at one go because you have some money lying idle? A single premium insurance policy is just the thing for you then. As compared to a traditional or a regular premium insurance policy where you pay insurance premiums at periodic intervals, this is a onetime payment solution for those who do not want to get into the hassle of periodic payments.

Once the premium payment has been made, you become the owner of a policy with a specific death benefit. It is literally a “fill it, shut it and forget it” kind of a policy, as you do not have to worry about paying any further payments or the lapse of your policy in case in forget to make any payments. All major insurers provide single premium life insurance policies for the benefit of their customers and you can use the help of a policy aggregator website to find out which one works best for you.

When should you buy a single premium policy?

Most people prefer to buy a single premium life insurance policy when they have a lump sum available with themselves. It may be a hefty tax fund, a cash gift from a relative an inheritance or some windfall gains in case of business owners. If you do not wish to spend this money right away and are wary of investing it in the markets, or you think there is some more insurance cover you could do with, you can certainly opt for a single premium life insurance policy.

Protect your wealth against taxation

A single premium life insurance policy provides you protection against the axe of taxes. You are given exemption of upto R 1.5 lakhs when you invest in a single premium life insurance policy. Further the sum assured is also tax free in the hands of the receiver. God forbid if something were to happen to you, your beneficiary would receive the money completely tax free. However do bear in mind, that on a single premium life insurance policy you will get the benefit of tax exemption only once, as you are investing in it for a single time only.

Forget about lapses 

Since the policy is paid up in full upfront you never have to worry again about the policy getting lapsed in case you forget to pay the premium. It is valid till the entire term of the policy and renders the sum assured after the policy term comes to an end. Creates cash value.

When you make the payment of single premium on a policy you are creating an asset for yourself. In case you need to avail of a loan facility, this can come in handy and can be used as a collateral against your loan. Besides, the cash value of the investment you have made accumulates every year, without you having to invest year after year.

Thus as you can see, single premium life insurance policies, though usually not the preferred vehicle for securing one’s life, can certainly offer some benefits. But the largest factor you should keep in mind is the affordability part of it. So if you can think of sparing the lump sum and locking it away to take care of your insurance needs, go ahead and get yourself that single premium insurance policy.

Source: Economic Times

 
 
 
 

"Be the CEO of your life"

- Robin S. Sharma -

QUOTE OF THE DAY

POLL

 

MOST VIEWED CONTENT

Understanding how student travel insurance works Understanding how student travel insurance works
Insurance Basics

Understanding how student travel insurance works

Given the high cost of medical expenses in developed nations, having appropriate insurance cover is a must for students travelling abroad for education and exploration alike.

Life insurance types simplified Life insurance types simplified
Insurance Basics

Life insurance types simplified

Broadly speaking, there are only two types of life insurance policies – ones that offer only a death benefit (Term insurance) and others that offer death + maturity or investment benefit (e.g. Endowment Plans or Unit Liked Insurance Plans).

5 things you must know before you buy life insurance 5 things you must know before you buy life insurance
Insurance Basics

5 things you must know before you buy life insurance

Life insurance is another such thing, and the right time to learn about it- any time between when you start earning money to when you’re forced to stop.

What to do after the death of your next of kin (Part 1) What to do after the death of your next of kin (Part 1)
Insurance Basics

What to do after the death of your next of kin (Part 1)

Parting from a loved one is always difficult and there is no parting more difficult and grievous than the one that comes with death. However, even in such unfortunate circumstances, there are certain obligations that you need to fulfil.

5 Odd insurance covers you won’t believe exist in India 5 Odd insurance covers you won’t believe exist in India
Insurance Basics

5 Odd insurance covers you won’t believe exist in India

Do you have a valuable possession you always wanted to insure but weren’t sure if it was possible to do so? After reading about these 5 strange insurances being availed in India, you’ll have your answer.

5 signs your agent is lying to you (and what to do if they are) 5 signs your agent is lying to you (and what to do if they are)
Insurance Basics

5 signs your agent is lying to you (and what to do if they are)

All insurance policies are available to everyone (subject to underwriting decisions). There are no special policies, so if you’re being told you’re being given preference, don’t take it at its face value.

What to do after the death of your next of kin (Part 2) What to do after the death of your next of kin (Part 2)
Insurance Basics

What to do after the death of your next of kin (Part 2)

Though working on filing an insurance claim after the death of a loved one is always hard, you must try and look at the bigger picture, which is that they wanted to make sure you are well taken care of.

boy

We would love to hear from you!

Question, comment or concern? Our contact form is the best way to get in touch. We will respond to you within 5 working days.

NEWSLETTER