A single premium life insurance policy is a suitable option for individuals who do not want to make regular premium payments. This article covers some of the best single premium plans one can consider including in their portfolio.
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Life insurance is an important financial tool in securing the financial future of one’s loved ones. In exchange for the cover extended by the insurance company, the policyholder is required to pay premiums on a timely basis - which may be monthly, quarterly, half-yearly or yearly. Now, what if an individual finds himself or herself unable to keep up with the payments, maybe due to irregular income or lack of financial discipline? Enter, single premium insurance plans.
What are Single Premium Plans?
A single premium insurance policy is one where the policyholder pays a lump-sum premium amount to the company and enjoys the benefits of life insurance for the entire policy period. Those with uneven cash flows or who have made windfall gains can consider going for single premium policies. Tax benefits, under Section 80C of the Income Tax Act, 1961, can be claimed only for the year in which the payments have been made. However, an essential point to be noted is that the exemption is available only if the premium amount does not surpass 10% of the actual capital sum assured. The proceeds from the policy are fully tax-free in the hands of the receiver.
Top Single Premium Insurance Policies
Nearly all the life insurance companies in the market offer single premium insurance policies. Here we have listed some of the single premium insurance plans one can consider including in their portfolio:
1 - LIC Single Premium Endowment Plan
Eligibility criteria:
| Eligibility | criteria |
|---|---|
| Minimum entry age | 90 days (completed) |
| Maximum entry age | 65 years (nearest birthday) |
| Maximum maturity age: | 75 years (nearest birthday) |
| Minimum policy term | 10 years |
| Minimum age at maturity | 18 years (completed) |
| Maximum policy term | 25 years |
| Minimum Sum Assured | Rs. 50,000 |
| Maximum Sum assured | No limit |
Benefits under the policy:
Death Benefit:
a) On the life assured’s demise during the policy period before the date of commencement of risk - Single premium returned excluding service tax and extra premium, if any, without interest.
b) On the life assured’s demise after the date of commencement of risk - Sum assured with vested Simple Reversionary Bonuses and Final Additional Bonus, if any.
Maturity Benefit:
Sum assured, along with vested Simple Reversionary Bonuses and Final Additional Bonus, if any, shall be paid.
Participation in profits: The plan shall participate in profits of LIC and shall be entitled to receive Simple Reversionary Bonuses, declared as per the Corporation’s experience.
Final (Additional) Bonus may also be declared in the year when the policy results into a claim either by maturity or death on such terms and conditions as may be declared by LIC from time to time.
Source: Official website of LIC
2 - ICICI Pru iAssure Single Premium plan
Eligibility criteria:
| Eligibility | criteria |
|---|---|
| Term | 5 or 10 years |
| Minimum age at entry | 5-year term - 13 years (age) 10-year term - 8 years (age) |
| Maximum age at entry | 70 years |
| Minimum Sum Assured | 125% of Single Premium |
| Minimum Premium | Rs. 20,000 |
Benefits under the policy:
Guaranteed Maturity Benefit (GMR)
When the policy matures, the insured will receive the Guaranteed Maturity Benefit, declared at policy inception. GMR = Single Premium amount X Guaranteed Maturity Benefit Factor
Death Benefit
In the event of the demise of the life assured during the policy term, the nominee shall receive Sum Assured or the Guaranteed Maturity Benefit, whichever is higher. Surrender Value
Surrender is not permitted during the first policy year. The surrender value will be the higher of:
- the Guaranteed Surrender Value
- the Non-Guaranteed Surrender Value
Source: Official website of ICICI Prudential Life Insurance
3 - Bharti AXA Life Invest Once
Eligibility criteria:-
| Eligibility | criteria |
|---|---|
| Minimum age at entry (age last birthday) | 8 years for 10-year term 13 years for 5-year term |
| Maximum age at entry (age last birthday) | 55 years |
| Maximum Maturity Age (age last birthday) | 60 years for 5-years term 65 years for 10-year term |
| Minimum Sum Assured | Depends on the minimum Premium |
| Minimum Annual Base Premium (Excluding applicable taxes and premium for enhanced death cover) | Rs. 5,000 |
Benefits under the policy:
Death Benefit
On the demise of the life assured, the sum assured payable is the sum of (1) & (2) as follows:
The higher of:
a. Sum Assured chosen by the policyholder
b. Sum Assured on maturity
c.125% of Single Premium plus mortality premium (if enhanced death cover is selected), for policyholder aged below 45 years at policy inception Or 110% of Single premium plus mortality premium (if enhanced death cover is selected), for policyholder aged 45 or higher a (if opted for) at policy inception
2. Enhanced Death Cover (if opted for)
Maturity Benefit
If the life assured survives till the maturity date of the policy, then 100% of Single Premium along with Total Guaranteed Additions accrued during the policy period (excluding Mortality Premium, if any) will be payable.
Guaranteed Additions:
Guaranteed Additions are calculated as a percentage of the Single Premium and shall be added every year until the end of the policy period. The guaranteed additions are payable on the policy’s maturity.
Source: Official website of Bharti AXA Life Insurance
4 - SBI Life - Smart Wealth Assure
Eligibility criteria:
| Eligibility | criteria |
|---|---|
| Minimum age at entry (age last birthday) | 8 years |
| Age at maturity | 75 years |
| Minimum premium amount | Rs. 50,000 |
| Policy term | 10 to 30 years |
Benefits under the policy:
Maturity Benefit:
On completion of the policy period, fund value shall be paid.
Death Benefit:
Higher of the Fund Value or Sum Assured is payable, with a minimum of 105% of single premium paid. Source: Official website of SBI Life Insurance
5 - Aviva Life Bond Advantage
Eligibility criteria:
| Eligibility | Criteria |
|---|---|
| Entry Age (last birthday) | 2 to 65 years |
| Maturity Age | 18 to 75 years |
| Policy Term | 10 to 73 years Subject to maximum age of 75 of Life Insured at maturity |
| Single Premium | Minimum: Rs. 50,000 Maximum: No limit, subject to underwriting |
| Base Sum Assured (Fixed) | 1.25 x Single Premium |
Benefits under the policy:
Death benefits:
On the demise of the life insured, the below shall be payable:
a) Higher of base sum assured or fund value pertaining to single premium at the date of notification of demise or 105% single premium paid and
b) Higher of top-up sum assured or fund value pertaining to top-up premiums or 105% of top-up premiums paid, if any. Accidental Death Benefit
In the event of accidental death, if the life insured is over 18 years but not more than 60 years, then along with death benefit, a benefit equal to the accidental death sum assured shall be payable.
Maturity Benefit
If one survives till the policy's maturity, the company will pay the fund value as on the maturity date. Source: Official website of Aviva Life Insurance
Conclusion
There are many single premium life insurance policies available in the market. To ensure that one picks the right plan, make sure to compare the features, benefits and costs of the available options. This way, an individual will be able to take the right call on which policy would be the best-fit to meet his or her insurance needs.
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