What is Single Premium Term Plan and How is it Beneficial?

What is Single Premium Term Plan and How is it Beneficial?

A term insurance plan is one of the simplest types of insurance plans available today. In the case of a term insurance plan, the life insurance company provides the policyholder's family with an assured sum in case of the policyholder's unfortunate and untimely death. Investing in a term plan is crucial for the financial security of you and your loved ones in today's uncertain and unforeseen times. In case of the policyholder's death, the family will not have to face any financial burden and can seamlessly achieve their goals and dreams.

Premiums are an important factor when we talk about term insurance plans. Premiums are a certain amount that the policyholder has to pay to enjoy the benefits of the term insurance plan. You can pay the premiums according to your comfort – it can be monthly, quarterly or annually. In the case of a single pay premium term plan, you can pay the premium at once for an entire lifetime in the form of a lump-sum amount.

Why Should You Choose Single Premium Term Plan?

A lot of people prefer opting for a single premium term plan when they have a lump sum amount available with them. Opting for a single premium term plan gives you peace of mind and keeps you stress-free from paying the premium amount again and again.

What are the Benefits of Opting for a Single Premium Term Plan?

There are various benefits to opting for a single premium term plan while investing. Let us look at some of the benefits.

1. Stress-Free and Peace of Mind

Having invested in a single premium term plan gives you peace of mind and leaves you stress-free from having to pay the premium amount again and again.

2. Tax Benefits

Investing in a single premium term plan gives you the benefit of saving taxes under Section 80C of the Income Tax Act, 1961. The death benefits are tax exempted under Section 10(10D) of the Income Tax Act, 1961. Under this benefit, the policyholder can claim tax benefits for up to 1.5 lakhs. However, tax laws are subject to change from time to time.

3. You Won't Have to Worry About Your Policy Getting Lapsed

Suppose you have invested in a single premium term plan. In that case, you will not have to worry about your term insurance plan getting lapsed if you forget to pay the premiums to your insurance provider as the premium you pay for a single premium term plan is valid until the maturity of the policy. In some instances, wherein the policy gets rejected due to delay or no premium payment, the family cannot claim the sum assured. In the case of a single premium term plan, you do not have to worry about your policy getting rejected.

4. No Need of Regular Checkups

After paying the single premium term plan, you do not have to worry about constant follow up and keep a check on when you have to pay the next premium. In a single premium term plan, the premium you pay is valid till the maturity of the policy.

Wrapping Up

A single premium term plan is an ideal term plan that leaves you free of worry from having to pay the premiums again and again. Moreover, you do not have to keep a regular follow up on when is the next payment of premiums due. Therefore, a single premium term plan is an ideal term plan to invest in.

Disclaimer:

Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

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