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Single Vs Regular Premium: Which ULIP Should You Buy?

Compare single vs regular premium ULIPs to choose the right investment-insurance mix for your financial goals.

Written by : Knowledge Center Team

2025-12-26

1254 Views

6 minutes read

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ULIP policies have become a priority for many people when it comes to buying life insurance. ULIP offers two choices to the policyholder for making life insurance payments - a single premium life insurance and a regular premium. Before you can figure out which payment option is the best for you, let's understand what exactly ULIP is.

Key Takeaways

  • ULIPs (Unit Linked Insurance Plans) offer the dual benefits of life insurance and market-linked investment in a single plan.

  • Single Premium ULIPs are suitable for those with a lump sum to invest and who prefer a one-time payment.

  • Regular Premium ULIPs offer better budget management with smaller, periodic payments and may suit salaried individuals.

  • Tax benefits under Section 80C apply to both options, but last longer in regular premium policies.

  • Regular premium ULIPs provide rupee cost averaging, which helps manage market risks better over time.

What is a ULIP?

In a ULIP, the insurance holder is eligible for insurance and investment benefits in a single plan. Unit Linked Insurance Plans serve as a product with dual benefits. It invests a small amount to secure your life, and the remaining money is invested in the market.

ULIPs allow you to build wealth over time while staying protected. You also have the flexibility to switch between different fund options as your investment needs or market conditions change. These plans are ideal for long-term financial planning as they help you meet life goals like children’s education, buying a home, or retirement, all while offering tax-saving benefits under Section 80C and Section 10(10D) of the Income Tax Act.

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ULIP: Single Premium Policy Vs Regular Premium Policy

In a single premium ULIP, the insurer avails the benefit of the policy by paying the entire amount of premium in a single instalment. In a regular premium ULIP, the insurer avails the benefit of the policy by paying the premium amount after a fixed period. The periodicity in regular premium ULIP can be monthly, quarterly, half-yearly, or annually, depending upon the policyholder’s requirements.

The suitability of the ULIP varies from person to person. The following factors will help you differentiate between the Single Premium and the Regular Premium ULIP, enabling you to make a more informed decision. 

  • Convenience: Generally, a single premium life insurance policy is supposed to be more convenient than a regular premium policy due to its single payment facility. The policyholder has no worries once the premium amount is paid; the insurance company takes care of the rest.

In a regular premium policy, the policyholder has to remember the dates of instalments, plus it can be a time-consuming process to send in the payments. Regular premium policies have become a convenient choice due to the facility of automated payment systems.

  • Tax Benefits: Under Section 80C of the Indian Income Tax Act, the policyholder can avail the tax benefit up to ₹1,50,000 on the annual premium paid for a life insurance policy. Section 80C acts the same for both single premium policy and regular premium policy, hence the limit is set the same for both.

The only difference between a single premium policy and a regular premium policy would be, in a single premium the policyholder can only avail of the benefit for that particular year, and in a regular payment, the policyholder can avail of the benefit of Section 80C till the term end of your insurance policy. Additionally, to enjoy tax-free maturity benefits under Section 10(10D), the premium must not exceed 10% of the sum assured.

Disclaimer: Tax benefits are subject to change in tax laws. Please consult your tax advisor.

  • Affordability: While selecting ULIP premium choices, financial planning also plays a vital role. Choosing a single premium insurance policy will allocate a significant amount of money towards the insurance policy. This payment might disturb the budget or financial stability for that particular year. A regular payment plan supports a uniform outflow of the total premium. Such an instalment system is quite suitable to incorporate the budget.
  • Premium Amount: An insurance policy serves as a long-term investment. A single premium policy can be opted for to invest a large sum of money. Single premium policies are meant for high premiums. In a regular premium policy, the policyholder must make regular payments until the insurance policy matures. But the premium amount is lower if compared.
  • Customisability: Both types of ULIP premiums can be customised. The difference between a single premium and the regular premium would be that, single premium insurance policy requires payment of a significantly larger lump sum to customise, and in the regular premium payment plan, the amount is less as the premiums are to be paid over 15-20 years.
  • Risk: Every investment suffers some kind of risk. Insurance policies are long-term investments in which the money is locked until the maturity of the term.. In a single premium policy, the individual pays a larger premium and exposes themselves to severe market conditions.

While in a regular premium policy, the rupee cost averaging is considered. Spreading a larger sum across a period saves the policyholder from extreme market conditions.

  • Maximum Returns: Single-Premium ULIP offers the maximum possible return as there is no chance of getting into discontinuity of funds. While in a regular ULIP, a shortage of money within the initial period of 5 years might cause the policy to shift into discontinuity funds. This will further result in minimum returns.

Here's a comparison table between Single Premium ULIP and Regular Premium ULIP for better understanding:

Factor

Single Premium ULIP

Regular Premium ULIP

Convenience

One-time payment; no need to track or remember future dates.

Requires periodic payments (monthly, quarterly, half-yearly, or annually); automation can ease this process.

Tax Benefits

Tax deduction under Section 80C is applicable only for the year of payment.

Eligible for 80C benefits every financial year of the policy term, provided premiums are paid regularly.

Affordability

Requires a large one-time outflow, which may strain the annual budget.

More budget-friendly; spreads the financial burden over the policy term.

Premium Amount

A high lump-sum premium is paid at the start; ideal for those with surplus funds.

Smaller periodic premiums; more manageable for salaried or regular income individuals.

Customisability

Customisation is possible, but it requires a large upfront premium amount.

Easier to customise due to distributed payments over 15–20 years.

Risk

Higher exposure to market risk in one go; returns are subject to market timing.

Lower average cost due to rupee cost averaging mitigates the impact of market volatility.

Maximum Returns

Potential for higher returns if invested at the right time, with the market performing well; no risk of policy discontinuity.

Risk of discontinuity if premiums are missed within the first 5 years, which can reduce overall returns.

Final Words

The regular premium insurance plan can have a longer period of 15-20 years and is most suitable for salaried individuals, along with families. While single premium insurance plans have a shorter period and are suitable for individuals who wish to invest a large sum of money safely.

At Canara HSBC Life Insurance, we understand that financial journeys are deeply personal. That’s why our Unit Linked Insurance Plans are designed to offer flexibility in premium payment options, fund choices, and long-term protection, so you can align your investment with life’s changing priorities.

Whether you're building wealth steadily or deploying a large sum for future security, our ULIP solutions help you protect what matters while growing your assets for tomorrow.

Explore our ULIP offerings and take a confident step toward a financially secure future with Canara HSBC Life Insurance by your side.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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