Features

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SINGLE PREMIUM ENDOWMENT PLAN 

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A life insurance policy for people who want to buy a policy for a one-time lump sum payment and then be covered for the specified term or for life, as per the insurance contract, without paying any additional premiums.

The benefits of single premium plans:-

want to buy an insurance policy, but don’t want to remember the due date for payment of premium?

Pay premium once and get covered for the term:-

As the name implies, in single premium policy, you have to pay the premium only once at the time of buying the policy. However you can continue to enjoy the cover throughout the term of the policy. E.g. if you take a policy with tenure of 10 years, you will continue to enjoy life cover for the 10 years, though you have paid premium in the first year only.

In the olden days, these policies were endowment policies, where you were given big assured returns. So they were more of the investment products than insurance policies. There was hardly any insurance cover, thus they were not actually insurance products. However today the situation has changed, making single premium policies good for some people.

Eligibility criteria for taking this policy:-

• You have to take the minimum sum assured of at least 5 times the policy premium. E.g. if your policy premium is Rs. 30,000, your sum assured should not be below Rs. 1,50,000. Moreover you are not allowed to lower the sum assured except in the final 2 years of the policy.
  This is as per the new guidelines laid down by IRDA. The idea behind this condition is to safeguard the customer interest. This is crucial because bigger the sum assured, higher the sum assured for you, thus making it more beneficial for you. Though you can get a sum assured exceeding 5 times the premium amount, most of them limit their products to 5 times the premium.

• The tax benefit offered on the premium paid on the insurance policy is applicable under section 80C, provided the premium amount is at least 20% of the sum assured or if the sum assured is at least 5 times the premium. This rule is applicable even to single premium policies.
  E.g. if the premium of a single premium policy is Rs. 25,000, it must have the minimum sum assured of Rs. 1,25,000 in order to enjoy tax benefit. This condition put a limitation on the single premium policies. Even if the premium is more than 20% of the sum assured, the maximum sum assured is still restricted only to 20%. Also the maturity amount is taxed.

You can go for it if you:-

• Don’t have a steady cash flow to pay a premium every year.

• If you are a regular traveler, making it difficult to pay your premium on time.

• Availability of lump sum amount.

• If you are a high income earner, you can opt for higher life cover.

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LIC'S SINGLE PREMIUM PLANS