Single premium term insurance policy is designed for those who want to buy a policy at one go. As compared to traditional insurance products, policyholders have to pay premium at periodic intervals for these policies.
It is a onetime payment solution for those who don’t want to go through the trouble of periodic payments. When the premium payment has been done, buyer becomes the policy owner with certain death benefits.
For single premium term insurance policy, policyholders don’t have to worry about paying any further premium payments or the lapse of your insurance if insured forget to make any payments.
All leading insurance companies in India offer this insurance for the benefit of their clients and customers can access some policy aggregator portals online to know which one is suitable for your needs. If you have a lump sum fund with you, then it is advisable to opt for a single premium term insurance policy.
Under this plan, policyholders get financial security against taxes. When person invests in this insurance product, he or she is given exemption of up to Rs 1.5 lakh. In case something happens to policyholder, his or her beneficiary would get the insurance money which is absolutely tax free.
But, insured is eligible to avail the tax exemption benefit only once for this policy because policyholder is investing in this term insurance for one time only. As you paid up in full upfront for this policy, so you don’t have to worry about the plan getting lapsed if you forget to pay the premium amount.
Your policy is completely valid till the entire policy term and reduces the sum assured when the policy period comes to an end. It generates cash value. Person is building a financial asset for himself or herself when he or she makes the premium payment for single premium term insurance. It comes in handy if you want to apply for loan and can be used as collateral against loan.