Single-Pay
Term Plan
  • When to Opt Single Pay
  • Eligibility Criteria
  • Pros & Cons Of Plan
Single-Pay Term Plan
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Single Premium Term Plan

A single premium term plan is a type of life insurance policy that requires the policyholder to pay the entire premium in a single lump sum payment, rather than making regular payments over time. This kind of policy offers protection for a predetermined term, usually between 10 and 30 years, and pays a death benefit to the selected beneficiary in the event that the policyholder passes away while the policy is in effect. The premium for a single premium term plan is generally lower compared to a regular term plan with the same coverage amount and term because the insurer does not have to worry about collecting premium payments over time. However, the policyholder is required to pay the entire premium upfront, which can be a significant financial burden for some individuals.

When to Opt for Single Premium Term Insurance?

Single premium term plan or one time premium term plan is a great option in term insurance, but it is not for everyone. There are certain things you must consider before opting for a single premium term insurance policy, they are:

  • You have a lump sum of money : If you have a large amount of money available, paying the premium upfront in a single lump sum can be a convenient option.
  • You want to save on premium payments : A single premium term plan typically has a lower overall cost compared to a regular term plan with the same coverage amount and term.
  • You wish to avoid the hassle of making regular payments : With a single premium term plan, you only have to make one payment and do not have to worry about making regular payments over time.
  • You have a short-term coverage need : If you only need coverage for a short period of time, a single premium term plan can be an economical option.

Term Insurance Companies

Check and compare plans from 21 IRDAI-approved term insurance providers before purchasing a term plan.

Eligibility and Documents Required for a Single Premium Term Plan

Eligibility criteria and the required documents needed for a single premium term insurance plan varies between insurance companies. The following are the common eligibility criteria and documents that are asked by insurance companies:

Eligibility

  • Age : Most insurance companies require the policyholder to be between 18 and 65 years old to apply for a single premium term plan.
  • Health : The policyholder must be in good health and free from any pre-existing medical conditions.

Documents Required:

  • Identity Proof : A government-issued photo ID such as a passport, driver's license, or PAN card.
  • Address Proof : A utility bill, bank statement, or rental agreement that shows your current address.
  • Income Proof : Proof of income such as salary slips, tax returns, or bank statements.
  • Medical Reports : Depending on your age and health, you may be required to undergo a medical examination and provide the results.

Although these are the main things required, it's important to check with your insurance company for specific requirements and to provide accurate information when applying for a single premium term insurance plan. Providing false information can result in the rejection of your claim in the event of an unfortunate event

Benefits of Single Premium Term Insurance

People opt for single pay term insurance as it offers several benefits to the policyholder such as:

  • Lower Premium Cost : A single premium term plan generally has a lower overall cost compared to a regular term plan with the same coverage amount and term.
  • Convenience : With a single premium term plan, you only have to make one payment and do not have to worry about making regular payments over time.
  • Easy To Budget : With a single premium term plan, you can easily budget your insurance expenses since the entire premium is paid upfront.
  • Life Coverage : A single premium term plan provides life coverage for a specified term, typically ranging from 10 to 30 years. In the event of the policyholder's death during the term of the policy, the designated beneficiary will receive a death benefit.
  • Flexibility : Some single premium term plans offer the option to convert the policy to a permanent life insurance policy, such as whole life or universal life, without having to undergo a medical examination.
  • Tax Benefits : In some countries, the premium paid for a life insurance policy may be eligible for tax benefits.

Disadvantages of Single Premium Term Insurance

While a single premium term insurance plan has several benefits, it also has some disadvantages, including:

  • Limited Coverage : A single premium term plan provides coverage for a specified term, typically ranging from 10 to 30 years, and does not offer a cash value component like some permanent life insurance policies.
  • No Premium Refunds : Once the premium is paid, it cannot be refunded, even if the policyholder cancels the policy or outlives the term.
  • Large Upfront Payment : The premium for a single premium term plan must be paid in a single lump sum payment, which can be a significant financial burden for some individuals.
  • Limited options : Some insurance companies may have limited options for single premium term insurance policies, making it difficult to find a policy that meets your specific needs.
  • No policy loans : Unlike some permanent life insurance policies, single premium term insurance plans do not offer the option to take out a loan against the policy's death benefit.

Tax Benefits of Single Premium Term Insurance Policy

Single premium term insurance policies offer several tax benefits that can help policyholders save money and potentially reduce their tax liability:

  • Premium Tax Deduction
    In some cases, the premium paid for a single premium life insurance policy may be tax-deductible. This is typically only available to businesses that use the policy to provide coverage for their employees.
  • Tax-Free Death Benefit
    The death benefit received from a single premium term insurance policy is typically tax-free. This means that the beneficiaries of the policy will not have to pay taxes on the death benefit they receive.
  • Tax-Deferred Growth
    Some single premium life insurance policies offer an investment component, such as a universal life insurance policy. The growth of the investment component is tax-deferred, which means that policyholders do not have to pay taxes on the investment earnings until they withdraw the money.

Final Thought

Overall, single premium term insurance is a good option for people who are looking for a convenient way to secure life insurance coverage for a set period of time, but it's necessary to carefully weigh the pros and cons before purchasing a policy. It's important to keep in mind that a single premium term plan is a long-term commitment, and once the premium is paid, it cannot be refunded. Before deciding to purchase a single premium term insurance policy, it's important to carefully consider your financial situation and determine if it's the best option for your needs.

Term Insurance Articles

What Our Customers Have to Say

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Piyush

Raipur

May 1, 2023

I seek help from PolicyX when it comes to purchasing any kind of insurance because they provide me with the best quotes and options for insurance

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Jaipur

December 14, 2022

PolicyX has a smooth service from booking policy to verification. Employees are very patient and have good knowledge and help you throughout the process. Had great experience dealing with them

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Somesh

Agra

December 9, 2022

I had many confusions regarding the term policies . But Policyx has handled it well, m happy that they are my wayfarer in this journey.

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Prerna Kumari

Mumbai

July 11, 2022

Good company. Presents nice term insurance plans and flexible plans also. My husband has brought one for the family.

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Priya Sangwan

Mumbai

July 11, 2022

IndiaFirst Term Insurance company ensures that your family s needs are looked after. One of the best companies offers a term plan per your needs.

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Priyanshi Deewan

Hyderabad

July 6, 2022

I recently received the claim amount of the policy that my husband had brought for us. I am glad that the company understands the needs of its customers and their families. Well done Canara HSB...

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Rishabh Kumar

Delhi

July 6, 2022

I bought a term plan with Canara HSBC for the protection of my family and have been satisfied with the benefits received. It is simple and easy to buy their plans.

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Samarth Gaur

Chennai

July 6, 2022

I am very happy with the term plans offered by the Canara HSBC Life Insurance company. The plans offer comprehensive coverage and I am sure will support my family after my demise.

Naval Goel

Reviewed By: Naval Goel

Naval Goel is the CEO & founder of PolicyX.com. Naval has an expertise in the insurance sector and has professional experience of more than a decade in the Industry and has worked in companies like AIG, New York doing valuation of insurance subsidiaries. He is also an Associate Member of the Indian Institute of Insurance, Pune. He has been authorized by IRDAI to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.