Know the Advantages of Single Premium Term Insurance

Life insurance is one of the most popular and fundamental instruments out of the several investment options available in the market. It is advisable to invest in such an insurance plan, as you never know what the future has in store for you. So, it becomes necessary to safeguard your family’s financial future in case of something unfortunate happens to you. 

One of the essential things that you should consider while buying life insurance is the sum assured. A sum assured is the death benefit that your family will receive if an untoward event occurs. Your sum assured should be able to fulfill your family’s monetary needs when you are no longer around. In such a case, a term insurance plan is an advisable option. However, first, you must have complete knowledge of what is term insurance, and why is it so popular?

Term insurance is a simple and pure type of life insurance policy that offers a high sum assured at an affordable premium. A term insurance policy provides life cover for a specific duration, and it is not like other traditional insurance plans that can give coverage through your life span. Such a policy is valid for a particular duration, as decided by you during the time of purchase. It is essential to pay the premium on time to continue getting life coverage throughout the term policy’s tenure. You can choose the frequency of payments from alternatives, like monthly, quarterly, semi-annually, or annually, based on your convenience. However, you can also consider a single premium term insurance plan. Here, you can pay a lump sum for the entire period of the policy.

Benefits of investing in a single premium term insurance plan

Here are some plus points of buying a single premium term insurance plan:

  • No need to remember the premium payment dates 

When you opt for a single premium term insurance policy, you do not have to remember the date of premium payment. Here, all you have to do is pay the policy’s total premium at once and forget about it till the end of the tenure. In the case of a regular premium, there are chances that you may tend to forget to pay the premium on time. Here, the insurer provides you a grace period to pay the pending amount, but if you fail to fulfill this obligation during this extended duration, your policy will lapse. With this, you will also lose the life cover and the financial protection of your family.

  • Provides financial assistance when required

One of the core beneficial features of a single premium term plan is that it allows you to obtain a loan. If you face any temporary financial hardships, you can pledge your policy against the loan. Such an amount can be a breather in case of financial emergencies.

  • Offers tax exemption

Single premium term insurance plans in India come with tax benefits. Here, the premium that you pay towards the term plan is eligible for a deduction under Section 80C of the Income Tax Act, 1961. The maximum permissible limit is capped at INR 1.5 lakh. To be eligible for this tax advantage, the premium should be equal to or lesser than 10% of the sum assured. However, if the policy’s premium is higher than 10% of the sum assured, you are eligible to get a deduction on an amount equivalent to or less than 10%.  Moreover, the death benefit that your nominee receives is tax-free as per Section 10(10D) of the Act. 

A single premium term insurance plan is ideal for you if you have surplus funds in hand. Here, you can pay a one-time premium, and ensure your family’s future monetary stability. A single premium term insurance plan reduces the load of tracking your policy and prevents it from getting lapsed if you cannot pay the premium on time. So, do not jeopardize your family’s future. Buy a suitable term insurance plan in India and heave a sigh of relief.

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