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2. All you need to know about
single premium life insurance
3. • Want to get over with buying an insurance policy at one go because
you have some money lying idle? A single premium insurance policy
is just the thing for you then. As compared to a traditional or a
regular premium insurance policy where you pay insurance
premiums at periodic intervals, this is a onetime payment solution
for those who do not want to get into the hassle of periodic
payments.
• Once the premium payment has been made, you become the owner
of a policy with a specific death benefit. It is literally a "fill it, shut it
and forget it" kind of a policy, as you do not have to worry about
paying any further payments or the lapse of your policy in case in
forget to make any payments. All major insurers provide single
premium life insurance policies for the benefit of their customers
and you can use the help of a policy aggregator website to find out
which one works best for you.
• When should you buy a single premium policy?
• Most people prefer to buy a single premium life insurance policy
when they have a lump sum available with themselves. It may be a
hefty tax fund, a cash gift from a relative an inheritance or some
windfall gains in case of business owners.
4. • If you do not wish to spend this money right away and are wary of
investing it in the markets, or you think there is some more
insurance cover you could do with, you can certainly opt for a single
premium life insurance policy.
• Protect your wealth against taxation
• A single premium life insurance policy provides you protection
against the axe of taxes. You are given exemption of upto R 1.5 lakhs
when you invest in a single premium life insurance policy. Further
the sum assured is also tax free in the hands of the receiver. God
forbid if something were to happen to you, your beneficiary would
receive the money completely tax free. However do bear in mind,
that on a single premium life insurance policy you will get the
benefit of tax exemption only once, as you are investing in it for a
single time only.
• Forget about lapses
• Since the policy is paid up in full upfront you never have to worry
again about the policy getting lapsed in case you forget to pay the
premium. It is valid till the entire term of the policy and renders the
sum assured after the policy term comes to an end. Creates cash
value.
5. • When you make the payment of single premium on a policy you are
creating an asset for yourself. In case you need to avail of a loan
facility, this can come in handy and can be used as a collateral
against your loan. Besides, the cash value of the investment you
have made accumulates every year, without you having to invest
year after year.
• Thus as you can see, single premium Life Insurance Policy, though
usually not the proffered vehicle for securing one's life, can certainly
offer some benefits. But the largest factor you should keep in mind
is the affordability part of it. So if you can think of sparing the lump
sum and locking it away to take care of your insurance needs, go
ahead and get yourself that single premium insurance policy.
