Weigh your options before choosing single premium plans

Sunday 10, June, 2012 The Life Insurance Corporation of India (LIC) has recently launched Jeevan Vaibhav, a single premium product, despite the the Union Budget excluding single premium products from insurance plans that qualify for tax breaks under section 80C. The insurance behemoth's confidence seems to emanate from the popularity of single premium products among insurance customers. Even the Insurance Regulatory and Development Authority (IRDA) had reservations on this product category, though it has decided later to allow single premium policies to continue. And, it is not difficult to understand why they are in demand. The obvious advantage is the elimination of recurring payments - you don't have to worry about a financial crunch in future depriving your family of a protection cover. It will also appeal to those with inconsistent or seasonal income flows. Moreover, if you are one of the lucky few to have been rewarded with a bonus this year, single premium plans act as a convenient investment avenue. This apart, since charges in such products are lower than regular premium plans, a larger portion of your premiums will be directed towards investment. Ceiling on commissions for single premium products is 2%, while annual administration charges are nil.

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