Maintenance hassles will be reduced, and reliability assured. And there will be some other facilities as well. Due to all these reasons, single-premium insurance plans are increasingly in demand in the market. Many customers want to take advantage of such plans. According to experts, the demand for such plans is unlikely to fall in the future. Why this ‘craze’,

What is a Single Premium Plan? Answer- You will get the benefit of life insurance by paying only a one-time premium, not having to pay repeatedly. With news of single premium making a comeback in the wider insurance market, today’s ‘Sanchay’ aims to discuss the various aspects of this plan.

Lately, many people are attracted to single premium. They are keen to take the services of a reliable insurance company for a one-time lump sum. Opportunities are also in front of them today – insurance companies believe that single premium schemes will come in the future as well. There is no doubt that such a plan has some advantages. As customers may think, running a single premium plan is relatively straightforward. However, interest rates on fixed deposits have generally increased. What is more profitable between the two, people want to know. Let’s take an example of a single premium, without any particular bias. Before us is the Dhanvarsha project of LIC. As per the terms of the plan, any ‘individual’ can buy once, together with the premium. Users of non-participating and non-linked plans can arrange protection for themselves and their families.

Some of its features are:-
#Two options for the policy term – ten and fifteen years.
#Guaranteed Addition available. It is possible to get up to 75 takas per thousand conditionally.
There is an option to choose #SomeAssured.
# Either 1.25 times, not 10 times as per tabular premium.

The talk of ‘savings’ – those looking for guaranteed maturity can think of such a plan. A one-time premium payment facility is considered the main attraction of this scheme. But note that the Guaranteed Addition will vary when the option (chosen) changes. Policy Term and Basic Sum Assured are two important terms here. While sound financial planning is possible using insurance products, one-time premium schemes can play a role in managing the risk of self and family. But it has to be seen whether all the needs of the customer are being met or not. Does he feel secure enough once with the premium? How do you want the term? Will he continue for ten years, or should he take more? How much life cover will he get for the plan of his choice? All these questions must be answered first. Along with this, the place of a single premium scheme needs to be understood. Where does the customer place such a plan (within his overall insurance portfolio)?

This year’s single premium will add up to the premium he normally pays every year (think traditional plans). Naturally, the one who can increase the allocation first has the advantage.

Single Premium Plan: Different
There is no dearth of single premium schemes in the world of insurance, but a plethora of options. Theirs is a ‘Single Premium Term Plan.’ An example is Canara HSBC’s Smart 360 Term Plan. Apart from life cover, other benefits are available. If a customer wants coverage for up to 99 years, that is also available (subject to conditions). Also specifies survival benefit (0.1 percent of the Sum Assured) till the end of the policy term or death (after attaining 60 years of age).

Another example is ICICI Prudential’s similar plan, where customers get access to multiple investment funds. He can choose equity, debt, or balanced funds. According to the company – benefits called ‘Wealth Booster’ will also be available. This booster will be useful at the end of the policy term. A possible scenario is illustrated in the accompanying chart.

#Customer Age: 30 years
#Policy Term: 10 years
#One Time Premium: Tk 1,00,000
#Life Cover: 10,00,000 Tk
#Return: Assuming first probability @ 4 percent,
(a) Maturity value will be Rs.1,20,285
(b) Assuming the second probability @ 8 percent, the maturity value will be Rs.1,76,531.

According to the company, the investment has been made in equity. If the subscriber dies during the term of the policy, his nominee will get the lumpsum payout, as per the policy terms. In this case, the reader may ask, what has been the return for so long? ICICI Prudential presents this list – only figures for four equity options are given.

So it is understood, how important is the right selection of investment. In single premium insurance schemes, where the market is investing, this context is very important. Chances of good returns are high if for the long term. In many cases there are options of 5 and 10 years, according to one’s risk profile, the customer has to choose the right policy term. There are also minimum and maximum age requirements that need to be understood. It is also important to know whether you can top up or not.

Know the Income Tax rules on insurance. These are applicable for single premiums also. Rules relating to Section 80C and Section 10 (10D) apply. These should be read beforehand.