Insurance companies provide compensation against financial losses to individuals who invest in insurance plans. These individuals need to pay a premium to the insurer to claim the compensation. The premium paying schedule can be at specified intervals over a definite period or one time.
There are merits and demerits of both regular premium and single premium investment options. This blog is a guide on single-premium life insurance plans.
A single premium plan is for you if you want to buy an insurance policy instantly with the surplus money you have. It is a one-time payment instrument. Once you pay the premium, you become the policy owner.
A life insurance or term insurance with a one-time premium is different from a traditional or regular premium plan. That is why it is the preferred plan for individuals who do not want the hassle of paying premiums at specified intervals.
Paying the entire premium upfront eliminates the need to worry about the policy relapsing should you forget to pay the premium.
After you have understood the single premium policy meaning, you should learn about the workings of the plan through an example.
Mr Raj purchased a 10-year single premium plan at the age of 40. He pays an upfront premium of ₹1 lakh with a policy sum assured of ₹10 lakh. In the event of Raj’s death, the beneficiary will receive ₹10 lakh as a lump sum.
Conversely, if Raj survives through the policy tenure, he will receive a maturity benefit depending on the performance of the investment assets.
The premium payment for a single premium policy is made during inception. But it does not affect the life cover or maturity benefit. The policy is a popular option among individuals who want to invest in tax-saving financial vehicles at the end of the financial year.
A one-time premium policy comes with the following advantages.
These policies are a lifesaver for individuals who can contribute a significant amount of money in one go and do not wish to track and make regular premium payments.
The risk of a policy lapse due to forgotten premium payments is eliminated, with the entire premium paid at once.
There are tax deduction provisions for single premium insurance policies under Section 80C and Section 10(10D) of the Income Tax Act 1961.
Single premium policies are attractive due to their benefits. However, remember to consider some things before making a purchase:
A single-premium insurance policy requires you to pay a premium at the time of inception. The death and maturity benefits of the plan do not change during the policy tenure. Thus, you can choose it if you have money lying idle and secure your family for the long term.
At PNB MetLife, you can buy a suitable life insurance policy to avail of financial protection and tax benefits. A single premium investment plan is ideal for individuals who have a significant amount of money gained either through inheritance, incentive, or bonus.
You can buy different types of single-premium insurance policies in India. These include life insurance, health insurance, and endowment policies.
People with a large lump sum amount of money should invest in the one-time premium policy to prepare themselves for irregularities.
Disclaimer:
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
PNB MetLife India Insurance Company Limited Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
IRDAI Registration number 117 | CIN U66010KA2001PLC028883
Terms & conditions apply, Benefits stipulated are subject to premiums paid and policies in-force. For more details on risk factors, please read the sales brochure and the terms and conditions of the policy, carefully before concluding the sale.
Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details.
Goods and Services Tax (GST) shall be levied as per prevailing tax laws which are subject to change from time to time.
The marks "PNB" and "MetLife" are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
Call us Toll-free at 1-800-425-6969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra.
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