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All You Need To Know About Single Premium Term Insurance

All You Need To Know About Single Premium Term Insurance

Term insurance premium

Ramesh, a freelance animator, received a substantial amount from his father. He wants to invest the money but has not finalised the financial products. When his friend Amit advised him to buy a term insurance plan, Ramesh was confused. He thought of term insurance as a long-term commitment and as a freelancer, Ramesh was hesitant to commit to regular payments. Amit told him about single premium term insurance and how Ramesh can secure his family’s future by paying a lump-sum amount.

What is single premium term insurance?

Before moving on to single premium term insurance, it is important to know what is term insurance? Term insurance is one of the simplest types of insurance products. The insurance company assures a pre-decided amount to be paid to the nominee in the event of the insured’s death on the condition that the policyholder pays the premiums without fail. Term insurance plans do not have any investment component and terminate after the policy term gets over. The payment of premiums is an important aspect of a term plan. Regular term insurance plans have a monthly, quarterly or annual payments plan, but you can also opt for single premium term insurance plans. With single premium term insurance plans, you have the option to pay the premium for the entire policy term at once as a lump-sum amount.

When should you opt for single premium term insurance?

If you are someone like Ramesh with a fluctuating income, a single premium term insurance could be a suitable option for you. Regular term insurance policies have premium payment tenures stretching over several years, which is a long-term commitment. Since you have to pay a lump-sum amount for a single premium term insurance it is slightly more expensive than regular term insurance. The ideal scenario to buy a single premium term insurance is if you have considerable funds which have to be utilised or have received a hefty cash gift or earned windfall gains in business.

Benefits of single premium term insurance

  • Buy and forget: With single premium term insurance, you do not have to worry about monitoring the policy and ensuring regular premium payments. One just has to pay once and policy remains active till the end of the policy term. In the case of regular term insurance plans, if you miss a premium, the insurance company generally gives a grace period for payment. However, if you do not pay or miss the payment even after the grace period, the policy lapses. A lapsed term insurance policy is of no use as the claim will be rejected when your family needs it in your absence.
  • Stress-free life: A term insurance plan ensures that your family remains financially secure even in your absence. With the premium paid as a lump-sum amount, your family is insulated from complexities of the policy. They just have to file a claim in the event of an unfortunate incident. Single-premium term insurance can also be used as collateral in case you avail a loan as you create an asset when you pay the premium for the policy.
  • Tax benefits: Single premium term insurance policy provides a host of tax benefits. The premium paid for the policy is eligible for deduction up to Rs 1.5 lakh under Section 80C of the Income Tax Act,1961. The death benefits paid by a term insurance policy is tax-exempt under Section 10(10D) of the income tax law. As per the act, the premium in a year, should not exceed 10% of the sum assured. In case the premium is more than 10% of the sum assured, only the premium equal to 10% of the sum assured is eligible for deduction. However, a term insurance policy buyer doesn’t have to worry about the capping as the sum assured of term insurance is generally substantial while the premium is relatively small.


A single premium term insurance plan can be a boon for people planning a secure future for their family but do not want to take on long term commitments. One can opt for Canara HSBC Life Insurance iSelect Smart360 Term Plan and choose from multiple coverages and premium payment options. The iSelect Smart360 Term Plan also offers various payout options and additional inbuilt covers.

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