In Focus 20 Nov 2020 Here's why it i ...

Here's why it is beneficial to have single premium term insurance plans

Published Nov 20, 2020, 11:15 am IST
Updated Nov 20, 2020, 4:10 pm IST
Now, more than ever, people understand the value of having a safety net in place. This is where a term life insurance plan comes in
Insurance to the rescue!
 Insurance to the rescue!

The world is reeling under the effects of the Coronavirus pandemic. Over 48 million people have already been infected worldwide with ~1.2 million deaths#.  Moreover, like many other countries across the world, India is also expecting a second wave of infections. Over 8 million people have already been infected in India with over 1.2 lakh deaths#. Now, more than ever, people understand the value of having a safety net in place. This is where a term life insurance plan comes in, one of the simplest option that suits the insurance needs of most individuals.

What is Term Insurance?

A term insurance plan is a type of policy that provides insurance cover against death for a specific time period. In case of death of the policyholder during the term of the policy, then a lump sum payment is made to the designated nominee. The payout under the policy would typically help the dependents lead a financially stable lifestyle even in the absence of the policyholder. On the flipside though, if the policyholder survives the policy term, no benefits are provided to the policyholder or his/her dependents. However, since term insurance plans have no investment component, the entire premium goes into covering the risk. Hence, these policies offer lower premium as compared to other types of life insurance products.

Regular vs Single Premium Term Insurance Plan

When it comes to insurance plans, the market is saturated with options. Yet, most of us are overwhelmed, not overjoyed by the choices. This is simply because the choices often leave us confused as to which one will best fit our needs. There are several types of term insurance plans in India . Two such types are regular premium term plan and single premium term plan.

The only difference between these two plans is essentially how you pay for the policy. While a regular premium plan lets you pay the premium of your term insurance plan periodically -- which can be throughout the policy term or for a limited number of years. Under a single premium policy, you can pay the entire premium for your policy upfront. By opting for a single premium term insurance plan, you eliminate the need to pay periodic premium payments while retaining the benefits of the term insurance policy.

Who Should Opt for Single Premium Term Insurance Plan?

These plans offer a number of benefits. While you need to make a bigger payment upfront, you buy the convenience of not having to worry about premium due dates and making payments year after year. Opting for such policies are apt for those who face the following situations:

  1. Those with irregular income

With an irregular income, it may be tricky to make premium payments at regular intervals. There are many professions where one may not get any income for months and then may get a large sum of money coming in all at once. It would be a good idea in such cases to buy a single premium term insurance plan so that you are able to cover yourself and don’t have to deal with one more expense to take care of when your cash flow is irregular/disrupted.


  1.  Those with busy schedule

If you have opted for a regular term insurance plan, you will need to pay premiums periodically -- on a monthly, quarterly, half-yearly or on an annual basis. Such a plan may not be apt for someone having a busy schedule, as it would be difficult for them to keep track of the due dates of these premium payments, and then actually making the payments. Moreover, failure to pay premiums on time may lead to policy lapse.

  1. Those who have received a large payout

Investing in a single premium term insurance plan is a great idea for those who have just received a large payout, for example, sale of real estate, inheritance from parents, bonus, windfall gains from business etc. When you are in possession of an idle, lump sum amount, investing in this type of term life insurance policy can be one of the preferred way to put your idle money to good use.

Opting for a term plan can help you protect your family’s life goals even in case you are not there to see them achieve them. In addition, when you go for a single premium plan, you ensure extra protection since there is no chance of policy lapse due to inability to continue premium payment. However, just like any important life decision, it is crucial to understand the features and benefits of the policy to determine if it is the right choice for you.

If you decide to go for a term plan, you may choose term insurance plans   by Bajaj Allianz Life Insurance, which offers both regular and single-premium options. Not only does the company offer a simple and quick claim-settlement process, Bajaj Allianz Life Insurance has a claim settlement ratio of  98.02 per cent for FY19-20$. You can also file your claim digitally, track the status online, get live updates via SMS, and most importantly get 1 day claim approval^. Moreover, the best thing about Bajaj Allianz’s term plans is that they cover deaths due to COVID-19 virus as well*, subject to policy terms and conditions.

Whether you decide to go for a regular-premium or single-premium option, you won’t go wrong by opting for a term insurance plan, a good-old-tried-and-tested solution for one’s insurance needs.


$Individual Claims Settlement Ratio for FY 2019-2020
*Health Insurance Policies of Bajaj Allianz Life
^87% of non-investigative individual claims approved in one working day for FY 2019-20. 1 day is counted from date of intimation of claim along with supporting documents before 3 PM on a working day (excluding Non-NAV days for ULIP) at Bajaj Allianz Life offices

Disclaimer: No Deccan Chronicle journalist was involved in creating this content. The group also takes no responsibility for this content.