What is the Difference Between Single Premium and Regular Premium in ULIP

Features

Single Premium Plans

Regular Premium Plans

Convenience

More convenient option as you do not have to worry about payment delays, inability to meet the payment deadline, etc.

You have to pay your premium instalments regularly within the due dates without forgetting. Therefore, it could be a hassle.

Affordability

These are less affordable if you are not backed with a strong financial support to pay a large sum at once.

Regular payment plans are more affordable, as you have to pay smaller amounts at regular intervals.

Tax Benefits

As per Section 80C of the Indian Income Tax Act, you can get a tax benefit of up to ₹5 Lakhs only for the year you pay the premium.

In this option, you will receive tax benefits every year till the end of your plan’s tenure.

Premium Amount and Frequency

Since insurance policies are long-term investment plans, the total investment amount generally stays on the higher end.

You have to pay a smaller amount each instalment, but at regular intervals till the plan matures.

Risk

The risk is much higher as you pay a large amount of premium at once, exposing you to risks and volatile market conditions.

The risk is lower as you pay a smaller amount across a more extended period and benefit from the averaging cost of the market fluctuations.

Customisability

Less customisable, as you may not be able to add rider options because of the fixed and one-time premium payment.

With regular premium options, you can add on benefits and increase your premium amount accordingly.

Maximum Returns

Less chance of discontinuation as there will be no payment miss. Hence, you will receive maximum returns.

If you fail to pay your premiums regularly, there is a chance of discontinuation within the first 5 years. Therefore, there is a chance of minimum returns.