Premiums can be a crucial component of every insurance product, whether traditional or non-traditional life insurance. When you buy life insurance products, you should pay the premium regularly in return for the coverage. After the regular premium payment, you can protect your family financially from unfortunate events. Since term insurance is a sub-subject of life insurance, premium payments can be a must. However, you can pay the premium in a lump sum or at regular intervals under term insurance.
Since regular premium payment can be hectic, many of you might choose a single payment term plan. Let’s understand the meaning of a single premium payment policy in detail:
As the name suggests, a single premium payment term policy can require a one-time premium paid at the time of purchase. However, you should pay a lump sum when you buy a term insurance policy. Once you make the lump-sum payment, your term plan can continue without the fear of policy lapse.
When you choose a single premium term life insurance, you might not have to worry about paying the money regularly. Purchasing a single excellent term plan can be the right choice if you have minimal income or cannot afford the annualized perfect payment mode. With a single perfect term plan, you can pay the premium once and reap the benefits until the policy’s ongoing tenure. That way, you can ensure that you do not miss out on any term insurance benefits while you get to pay the premium payment only once.
Buying a single premium term policy can be simple. However, you might get confused at the time of purchase due to the number of options available in the market. Therefore, let’s go through the top four factors you should consider before you purchase a single premium term policy:
Sum assured
A term plan can be one of the most affordable insurance products. Under a term plan, you can receive comprehensive coverage based on your evolving needs at an affordable rate. Select the sum assured value after you evaluate your family’s financial requirements. Moreover, consider your financial goals, expenses, current lifestyle, and income rate before finalizing a figure.
Premium
Under a single premium term policy, the premium amount can be relatively high. When you purchase a term policy, your insurer might ask you to pay a premium value in a lump-sum amount until the ongoing tenure. Therefore, check the affordability of the premium amount and buy term insurance accordingly. Also, calculate the premium amount using a term insurance calculator before making the final purchase. If you buy term insurance without considering the premium amount, your policy can lapse when you cannot pay.
Duration
A term policy can offer financial coverage for a specific duration. You should choose a maximum tenure since the death benefits can be provided to your loved ones until the ongoing term. A longer period can cover your family’s future and increase the probability of the claim. Ideally, you can select the time for 15, 25, or 35 years based on your family members’ requirements.
Rider
Riders can be additional benefits to enhance the core term policy. Moreover, it can protect you from unfortunate events such as critical illness, loss of income, physical disability, and so on, which might not be directly covered under your term policies. Since riders are provided separately, you should be careful when selecting them. Invest wisely in riders as a policyholder since it can increase your term policy’s overall cost. Choose the riders which can benefit your family members in the long run. Typically, you can select an accidental death rider, a waiver of premium rider, a physical disability rider, and a critical illness rider.
A single premium term plan can be the right choice if you want long-term protection with a one-time premium payment. Compare various options in the market before you finally buy a term insurance plan that suits your needs. Since premiums can be crucial, choose the policy only if you can afford the hefty premium amount.
