Single Premium Vs Regular Premium ULIP – Which One Should You Choose?

19th March 2019

There is no second opinion in the fact that ULIP plans are one of the good investment choices for wealth creation and getting a life insurance cover simultaneously.  However, choosing the right scheme is a tough nut to crack. Based upon the type of premium payment, ULIP plans are available in two options –

  1. Single premium ULIP – Single premium or SP ULIP is when the investor pays the premium amount in one go for the entire policy term.
  2. Regular premium ULIP – Regular premium or RP ULIP is when the investor pays the policy premium amount over a period of time. The premium could be paid monthly, quarterly, half-yearly or annually based on the affordability of the investor.

Choosing between single premium ULIP or regular premium ULIP is a tough task as both the plans serve their purposes with equal credibility.  While the regular premium ULIP plan is a great way to make small and steady investments, single premium ULIP plan is hassle-free and gives you the ultimate peace of mind with lump sum premium payment.
As both the options have a set of merits over each other, investors usually struggle hard to pick out the most suitable ULIP plan for them. Are you amongst the one? Then the post will help you out.

Which offers the best benefits?
The number of benefits offered by both the ULIP plans is another major factor that plays a pivotal role in deciding which plan one should pick. Here is a deep insight of the benefits of both the plans.

Benefits of Single premium ULIPs
As far as benefits of single premium ULIP are concerned, we can easily vouch for a one-time payment as it gives you peace of mind from remembering premium due dates. Once your premium has been paid, it continues without any hindrance since you have paid your premium at one go. Further explanation of these benefits can be given as:

  • No fear of policy lapse – As you are going to pay your premium amount in one go, you can set yourself free from the fear of policy lapse.

Benefits of regular premium ULIPs

  • Tax Benefit – Single premium ULIP plans offer a one-time tax benefit across the tenure of the policy, while regular premium ULIP allows an investor to get tax benefits up to Rs. 1.5 lakh on the premiums paid every year as per Income Tax Act 1961, subject to provisions contained therein.
  • Rupee cost averaging benefit – The regular premium payment ULIP plan offers you the rupee cost averaging benefits through way of systematic investment over a period of time.
  • Systematic investment – With Regular Premium ULIP, you can actually have a systematic investment plan where you can invest small amounts over time and adjust your investment capacity as per your spending capacity. You can make monthly, quarterly, half-yearly or yearly investment plan and align it with your other financial needs.

What is common between SP and RP ULIP?
Apart from these plan based benefits, there are some common benefits that both the plans offer. Funds switching and choices of funds are few of them. So, not matter which plan you offer, you are going to avail all these benefits in both the options.

Factors to take into consideration while choosing between SP ULIP and RP ULIP

  • Your investment capacity – As we have clearly mentioned that SP and RP ULIPs asks for different sort of premium payment, it is suggested to know your investment capacity in advance. If you have a huge sum readily available, then SP ULIP is better option. However, if you want to invest small amount of money over a period of time RP is a good option.
  • The convenience factor – One may tend to forget a few stuff in the heat of a moment or due to a busy schedule. To avail the maximum benefits of your ULIP, it is important to pay premium on time. Any missed instalment may lead to a policy lapse. Single Premium ULIPs saves you from this situation.

Both the schemes have their own benefits and serve the investment purpose at different dimensions. Being an investor, you have to pick the best ULIP plan as per your need and investment capacity to churn out the appropriate benefits. So, make a wise decision and keep on investing.

Read more to know why you should invest in ULIP now.



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