Difference between Single Premium vs Regular Premium Life Insurance

Differences Between Single Premium and Regular Premium Life Insurance Policy

Let’s do a comparative analysis of the two types of premium payments to show their benefits and drawbacks. 

Parameter Single Premium Policy Regular Premium Policy
Expediency Requires a one-time lump sum payment. Requires periodic and timely payments
Affordability Requires you to make a comparatively high amount of investment More affordable as the total premium amount gets distributed over a period of time
Return on Investment Comparatively lower due to the inflation factor Higher
Customisability Requires a payment of a set amount Premiums can be customised
Risk Riskier as it is a one-time investment Comparatively less risky if we factor in rupee-cost averaging
Tax Benefit Tax benefits can be availed only once up to the tax limit for that year Tax benefit can be availed on premiums paid every year

Frequently Asked Questions

Is there a chance of a single premium policy lapsing?

No, since you pay the policy premium upfront, there is no chance of defaulting on premium payments. Hence, you do not have to worry about a single premium policy lapsing.

What can be the maximum tenure of a single premium insurance policy?

Depending on the age from when you start investing, your single premium insurance policy can have a tenure of a maximum of 30 years.

Why do policy premiums vary from one individual to another?

An insurer determines the policy premiums by analysing a lot of factors such as your age, marital status, habits, residence, etc. Hence, the policy premiums vary from one individual to another as these factors are variable.