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Mumbai, August 27, 2020
There is no real way to predict the future, but that does not mean you cannot take measures to make it more secure for yourself and your loved ones. If you always worry about what will happen to your family in case of your absence, it is high time to consider purchasing a life insurance policy. A term plan is an excellent option, as it costs less than other life insurance policies, but offers a substantial cover.
What is a term insurance policy?
If you are wondering what is term insurance, it is a life insurance policy that provides only a death cover and has no maturity benefit. It is an affordable option that guarantees the financial security of your loved ones if you are not around to take care of them. As the name suggests, a term life insurance policy stays active for a fixed period. If an unfortunate event results in your absence before the maturity date, the insurance company pays a lump sum to your nominees. You need to pay a premium to invest in the term plan. You will come across various premium payment options available. Here, we will discuss the single premium term life insurance policy.
What is a single premium term life insurance policy?
A single premium term insurance policy is one of the most convenient plans you can purchase in India. To buy the term plan, you have to pay a one-time premium during the start of the policy. Once you pay the lump sum, the term plan remains operational for the entire policy tenure. This option eliminates the need to remember to pay the premium regularly, and there is no chance of policy lapse.
When to buy a single premium term life insurance policy
When you opt for an online term policy, there will be many payment options, including the single premium choice. This option is not for everyone, as a single premium term insurance policy requires a considerable upfront payment. If you want to avoid regular payments or have idle savings, a single premium payment option may suit you more. However, it would help if you consider all your options before committing to a term plan with a single premium. Such a plan is ideal only when you have the financial capability to pay the lump sum.
Benefits of a single premium term life insurance policy
A term life insurance policy with a single premium option has multiple advantages. Some of these include:
Peace of mind
When you buy term insurance online with a single premium option, you can lead a stress-free life. A term plan ensures that your loved ones will be financially secure during your absence. When you buy the policy with a one-time payment, there is no need for worrying about paying the premium at timely intervals. You need not take tension that the policy will expire in case of the non-payment of premiums.
· Productive use of idle money
A single premium option is best for people who have substantial funds. Experts suggest that you should always invest your unused money into instruments that benefit you the most. In these uncertain times, a term life insurance policy is a beneficial investment option. With a single premium, you can utilize the idle money and ensure the financial comfort of your dear ones.
Section 80C of the Income Tax Act, 1961, allows a tax deduction of up to INR 1.5 lakh annually on the premium paid towards the term plan. The death benefit on the single premium term plan is tax-free under Section 10 (10D) of the Act. However, you can avail of these benefits only if the single premium value is not more than 10% of the term policy’s sum assured.
If you buy term insurance online, it is easier to choose a policy and make a single premium payment. You can complete the whole process on the insurer’s website, right from the comfort of your home.
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