What's a Single Payment Term Insurance and How is it Beneficial?

What's a Single Payment Term Insurance and How is it Beneficial?

There are many life insurance companies that provides some of the best insurance policies in India. Their plans have options for flexibility and customization. They provide various kinds of insurance plans according to the different needs of the customers. A popular method to differentiate insurance policies is by their payment terms. The three main types are single payment term insurance, monthly payment term insurance, and yearly payment term insurance. Read on to more about single payment term insurance and its benefits.

What’s a Single Payment Term Insurance?

Usually, insurance policies have monthly or annual premium payments. But a single payment term insurance has a one time investment with returns only after a few years. It might be similar to a fixed deposit, but it is for larger sums with insurance benefits. Many customers do not prefer single payment term insurance due to the high investment amount. You must have a large amount in hand to join a single payment term insurance.

How is a Single Payment Term Insurance Beneficial?

Did you recently secure a large sum of money and want to invest it without the risk of capital loss? Then a single payment term insurance is the best means to do it. These policies are also popular because they give more interest rates than existing fixed deposit rates. There are also several other benefits to a single payment term insurance. The listed below are the 6 main benefits of a single payment term insurance.

One Time Payment

As mentioned earlier, a single payment term insurance requires a one time payment. You have to pay the entire premium amount in one payment. A limited pay term will help you buy the insurance and forget about it until it matures with added benefits. Such term insurance limited pay also requires lesser transactions and the online and offline expenses of cheques and transfers.

No Worries of Monthly or Yearly Payments

As the single payment term insurance doesn’t have any monthly or yearly payments, you can remain peaceful. You don’t need to arrange money periodically for limited premium payment term insurance plans. Also, insurances require payments around the first of the month. Sometimes, you cannot gather the amount at the beginning of the month due to late salaries. Limited premium paying term policies will give you peace of mind from the hassle of gathering money every month or year.

Convenient

A single payment term insurance is the most convenient way of insurance. You just need to take care of a single payment, a single policy document, and a single payment receipt. If you are working on a busy schedule, a one time payment term insurance plan is the best option. A one time payment term plan will also have a limited maintenance requirement.

Best Usage of Surplus Money

As mentioned earlier, a single payment term insurance is the best way to invest surplus money. But this is only suitable if you won’t require your surplus money for the long term.

Tax Benefits

Single payment term insurance also has the benefit of tax exemption. According to the Income Tax Act of 1961, you can claim deductions in income tax for insurance premiums. According to Section 80C you can claim up to ₹ 1,50,000 in a financial year. However, tax laws are subject to change from time to time.

Surrender Value

A single payment term insurance also gives surrender value as per their terms and conditions. If you wish to discontinue midterm from a one time payment term insurance plan, you can get partial benefits. The policy papers mention the partial benefits of the one time payment term plan.

Wrapping Up

Now you must understand the concept of single payment term insurance. If you gain access to a large sum, you must invest it in single payment term insurance for extra benefits. Or you must invest through the conventional monthly or yearly insurance policies.

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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