Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term

Protect Your family’s financial future with Kotak e-Term. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

What is a Single Premium Term Plan and its Tax Benefit?

If you want to pay the entire premium in one go, you can opt for a single premium term insurance. Know the tax on single premium life insurance policy and its benefits.

  • Aug 19, 2022

A single premium term insurance policy is a significant investment you make to attain financial security at a later stage in life. It involves a specific amount known as a premium, which is paid for the contract. In return, the company pays a particular amount in case of death or at the time of maturity of the policy. It would help if you considered different options when it comes to the premium payment.

Life insurance plans offer a great deal of flexibility in terms of both premium payment and payout modes. However, out of the different modes of paying premiums offered by most insurance companies, single premium payment is one of the most sought-after options.

What is a Single Premium Life Insurance Policy?

When a policyholder wants to pay the entire premium in one go, they can opt for a single premium term plan. Apart from this, there are other types of premium payment modes like a limited pay insurance plan, where you pay the amount for a specific tenure like five years, seven years, or ten years, or a regular pay insurance plan, where you pay the premium at fixed intervals throughout the policy tenure.

Eligibility and Documents Required to Apply for a Single Premium Term Plan?

Single-premium term plan is the most basic type of coverage. These policies offer you and your family long-term financial security against unforeseen events of life. In addition, these plans significantly protect your loved ones during uncertainties by providing financial support in your absence at pocket-friendly premiums.

The buying process is hassle-free and requires limited documentation. However, it is noteworthy that you should pay utmost attention to the documentation necessary for applying for a term plan. This is because having the proper documents handy does not only expedite the purchase process but also increases your chances of getting the policy accepted and approved.

Following are the documents required for the single premium term insurance plan.

  • Proof of identity
  • Any official document or ID proof, such as a PAN card, Aadhaar card, voter’s ID card with photograph, passport, etc., are considered valid documents for identity proof.

  • Proof of Age
  • Your age affects various aspects of the insurance plan, including the premium price, your eligibility, and occasionally even the length. You can present your birth, marriage, or other official documents as proof of age.

  • Proof of Medical History
  • You must share your previous medical records with the insurer before buying a term plan since your medical history may play a significant role in determining the premium and amount insured.

  • Proof of Address
  • The documents required for term insurance understand this head can be the same as identity proof, that is, the electricity, water, or other utility bills.

  • Proof of Income
  • You can submit salary slips for the last three months or the bank statements for the previous six months. Additionally, you can share your latest two years’ income tax return. Additionally, salaried individuals can also share the latest Form 16. However, self-employed individuals can share their ITR filing details or the Form 26 AS.

    It is best to verify that you match the eligibility requirements for a term insurance plan before applying. Submitting these documents is critical as proper documentation and details help insurers:

  • Assures the insurer that you are a residing Indian
  • Updates them on your medical history and current health condition
  • Helps with a stress-free process of buying, renewing, and settling claims
  • Empowers you to avail yourself of the numerous policy benefits

Tax Benefits of Single Premium Life Insurance Policy?

Premium payment in the case of a life insurance plan is eligible for a tax deduction under sections of the Income Tax Act, 1961. However, one of the most talked-about tax exemptions available for the policyholder is through Section 80C deduction, under which they get a maximum limit of ₹1.5 lakh for a single premium policy.

Moreover, the taxability of a single premium term insurance policy on maturity remains exempted under Section 10 (10D) of the Act. Therefore, single premium term insurance qualifies for the same benefits. However, not every policy will offer the same benefit as a regular life insurance plan. Hence, financial advisors always recommend choosing the plan prudently.

Conditions for exemption on maturity payout under Section 10 (10D)

In the case of life insurance plans issued after April 1, 2012, the exemption from tax on single premium term insurance is valid only when the premium is less than 10% of the total sum assured. It applies to a single premium term plan as well. In a one-time premium term plan, the proceeds from maturity will remain tax-free if the minimum sum assured in the policy is ten times the single premium amount paid. Tax Deduction at Source (TDS) of 1% will also be applicable here. Additionally, for a death claim, the proceeds will be tax-free.

What is offered as the sum assured?

In a one-time premium term plan, the company will determine the minimum and the maximum sum assured limit. The minimum amount insured is 1.25 times the single premium amount, and the maximum amount is about ten times.

Benefits under Section 80C for Single Premium Life Insurance Plan

The premium in online life insurance is valid for a deduction in Section 80C. The maximum amount is ₹1.5 lakh, and the policy should be issued after April 1, 2012. When the premium amount is more than 10% of the sum assured, the tax exemption will only be available for up to 10%.

Tax Implications for the Surrender of Policy

Surrendering a life insurance policy is all about renouncing it before the deadline and receiving any benefits still valid as of the surrender date. For example, surrendering the policy would mean ending a 30-year plan only after the first ten years and taking advantage of any benefits before the actual tenure is completed. The value you receive after surrendering the plan is referred to as the surrender value.

The type of insurance plan you own determines the tax regulations for surrendering it. However, the surrender value is tax-free only when the following requirements are met.

  • The surrender value is tax-free for traditional life insurance plans like an endowment plan when you consistently make the premium payments for the first two years.
  • If you have owned a single premium term insurance policy for at least two years following the date of purchase, you can avail yourself of a tax-free surrender value.
  • If you own a ULIP, the surrender value is tax-free only if you surrender the policy five years after the purchase date.

In addition to the factors above, the date on which your insurance policy was issued impacts whether or not the surrender value is taxable. In the event that you purchase a pension plan and decide to surrender it, the surrender value you receive from the insurer is tax-free because there is no tax provision for the same. Additionally, any tax exemptions you may have used to pay your premiums are overturned, and you are then expected to pay taxes on those exemptions.

Therefore, if you’re considering cancelling your single premium term insurance policy, you must be aware of the financial complications. In addition, there is a minimum stay period of two years for the policy. If surrendered before this duration, the tax deduction allowed previously will be considered income, and the policyholder has to pay the applicable taxes. Therefore, to avoid the risk of paying taxes, you should also check whether the surrender value is exempt from taxes.

Understanding what a single premium term plan is and its tax benefits are crucial to determining your future goals and then making a decision. Therefore, when buying an online single premium term insurance policy, you need to plan as per the present scenario and keep the tenure and sum assured in mind.

Kotak e-Term

Download Brochure


  • Life Cover till 85 years for Life & Life Secure Option
  • 3 Payout Options
  • Special Rates for Women
  • Option to exit the policy with premium refund at the age of 60*
  • Special Rates for Non-Tobacco Users
  • Free Medical Check Up every 5th year**

Ref. No. KLI/22-23/E-BB/2435


- A Consumer Education Initiative series by Kotak Life

Similar Articles

Why do most Indians choose the wrong way to buy life insurance?

Life Insurance for Overweight Applicants

Kotak Life Claim Settlement Ratio

Different Types of Insurance Policies in India

Choosing Between Short-Term & Long-Term Insurance Plans

Different Kind of Deaths that are Not Covered in a Term Insurance Plan

What Should One Consider Buying: Term Insurance or Traditional Life Insurance

First Job? Here’s Some Tips on How to Manage Finances

Terms and Conditions of Term Insurance Plans

Types of Insurance You Must Invest in for Secure Future

A Term Insurance Guide for Disabled People

What is Minimum Life Insurance Policy?

Different Types Of Life Insurance In India

Difference Between ULIP and Endowment Plan?

Term Life Insurance Vs Money Back Life Insurance

How Much Life Insurance Do You Need?

Top 5 Common Life Insurance Myths and Facts

How to Buy a Term Life Insurance Online

क्या जीवन बीमा एक निवेश है?

Process of Filing A Claim For Life Insurance

Sabse Pehle Life Insurance

What is Sum Assured in Endowment Policy?

What happens to joint life insurance after divorce?

Guidelines for Linking Aadhar and PAN to Insurance Policies

Adding A Child to Your Life Insurance Policy?

How to Choose the Right Life Insurance Policy for Your Age?

What Is Staggered Payment Option Under Term Insurance Policy?

Life Insurance for Millennials

Life Insurance Beneficiary

Do Life Insurance Premiums Increase Every Year?

5 Reasons Why a Women Should Buy a Life Insurance

Beware of Phishing & Fraud Insurance Calls

Benefits of Term Insurance with Critical Illness Rider

How To Choose The Right Life Insurance

Is it Possible to Make Changes in a Term Plan’s Specification Post Purchase?

Term Insurance Vs Life insurance: Small Details, Big Differences

How to Choose Life Insurance for All Ages?

Life Insurance vs Mutual Funds

What is the Difference Between Insurance and Reinsurance?

Nominee in insurance - A Complete Guide on nomination in insurance

5 Things to Consider Before You Buy Life Insurance

Unit-Linked Life Insurance (ULIPs) vs. Term Insurance

What Happens If I Stop Paying My Life Insurance Premium?

What is the Current Trend in Term Insurance?

Comparing low premium term insurance Is Not the Only Factor While Buying Life Insurance

How to Select a Perfect Life Insurance Policy in India to Protect Your Future?

How to Revive the Lapsed Life Insurance Policy?

9 Most Important Things You Must Learn About Paying Life Insurance Premium

How to Choose a Life Insurance Policy

Term Insurance Claim Process

How to Buy a Life Insurance Plan?

Can You Transfer Life Insurance Policies to Another Company in India?

Why Your Family Should Know About Your Life Insurance Policy?

What is an Endowment Plan?

Why You Should Buy Term Insurance under the MWP Act (Married Women’s Property Act)?

जीवन बीमा पर ऋण

What are robo-advisors in insurance?

Guide for Buying Online Term Insurance Plans for Senior Citizens

Key Things to Review in Your Life Insurance Policy Document

Insurance Changes You Need to Make Post Marriage

Who Is A Nominee In A Life Insurance Plan?

How do life insurance payouts work?

Always keep your Nominee informed

When are Millennials required to take out a life insurance policy?

What Is Insurance Rider and It’s Benefits?

Term Life Insurance vs Accidental Death Insurance

Health Insurance VS Life Insurance

Life Insurance for Overweight Applicants

In India, should NRIs purchase life insurance?

Term Insurance Tips for NRIs in India

How Often You Must Review Your Life Insurance Policy?

Why do I Need Life Insurance?

All About Backdating in Life Insurance

Can An Individual Buy Multiple Term Insurance Plans?

6 Things You May Not Know about Life Insurance

Life Insurance Plans for Women

Life Insurance with Money Back vs Without Money Back

What is Insurance Coverage? Overview, Types, and Examples

5 Smart Steps to keep in mind while buying term policies

Insurance Vs Investment - A Guide to Your Financial Goals

All about IRDAI

How Does Life Insurance Work?

Term Insurance Vs Car Insurance: A Budgetary Choice You'll Regret

Life Insurance and Retirement Planning

Role of Life Insurance in Your Financial Portfolio

A Step-by-Step Guide: How To Make An Investment Plan?

Is It Time to Review Life Insurance Policy of Yours?

What is Life Insurance?

Important Terminologies of Life Insurance

5 Reasons Why You Need Life Insurance in College

Choose the Nominee of a Term Life Insurance Plan Wisely

Does Life Insurance Cover Terminal Illness?

10 Most Frequently Asked Questions - FAQs on Term Insurance

What Is The Life Insurance Penetration In India And How Does It Compare Globally?

5 Advantages of Life Insurance Going Digital

Can You Apply For A Life Insurance After Getting Heart Attack? Here is Everything You Need To Know

Life Insurance Nominees: 5 Must-Know Facts for Beneficiaries

All about Life Insurance Calculators

5 Benefits of Gifting Life Insurance Cover to Your Spouse

5 Ways to ensure faster settlement of claims

7 Superficial Reasons People Avoid Buying Insurance Online

What is Underinsurance & The Dangers of Being Underinsured

How to Find the Best Term Insurance Plan in Seven Steps

What is Human Life value and a Human Life Value Calculator?

Types of Life Insurance Or One Investment, Many Options

Reasons Why Term Insurance Claims Get Rejected

When Should You Review Term Life Insurance of Yours?

What are the Benefits of Endowment Policy?

Health Insurance VS Life Insurance

Why is Medical Test Important While Buying a Term Insurance?

Difference Between Money Back and Endowment Policy

How to Make Death Claims on Life Insurance?

Is Voluntary Life Insurance the Same as Basic Life Insurance?

Important Factors to Consider While Choosing the Right Term Period for Your Term Insurance Plan

1 CR Term Insurance Plan: How to Pick the Best 1 CR Term Plan

Does Family History Affects your Term Life Insurance Rates?

Why Term Insurance for Women is Important?

Think About Life Insurance Sooner than Later

Details Required To Be Filled In A Life Insurance Form

5 Easy Steps to Buying A Policy

Important Life Insurance Terms You Must Know

Voluntary Life Insurance Policy Vs Group Life Insurance

What is the Difference Between Limited and Regular Pay Insurance Plan?

Do Your Financial Planning with Life Insurance!

Is Life Insurance For Millennials Really Needed?

जीवन बीमा क्या है?

Difference Between Insurance and Assurance?

What Is the Procedure to choose a nomination in life insurance policy?

Is It Advisable To Have Multiple Life Insurance Policies?

What Is a Whole Life Insurance Plan?

Can NRI Buy Life Insurance in India?

भारत में सर्वश्रेष्ठ टर्म प्लान कैसे चुनें?

What Is Investment Insurance?

Why Life Insurance Is Always a Smart Decision

All About Life Insurance and How It Works?

Importance of Checking Claim Settlement Ratio before Buying Life Insurance

Does Life Insurance Policy Cover Covid Death?

Role of IRDAI in the Insurance Sector

What Is Social Impact Investing and How Does It Benefit Society?

Life Insurance Vs. Mutual Funds Investment

NRI Premium Payment Options

Everything You Must Know About ULIP Riders

Take 100% Responsibility of Your Family with Term Life Insurance

Best Insurance Plans in India

What is Group Insurance?

Benefits of Buying Term Insurance Plan for Senior Citizens in India

ULIPs: Suitable for all

Why One Must Buy Term Insurance before 25 Years

Various Term Insurance Premium Payment Options Available in India

What Is Financial Planning?

Are Deaths Due To Coronavirus Covered by Kotak E-Term Plan?

“Life” Insurance or “Death” Insurance?

How to Calculate Human Life Value(HLV)?

5 Common Life Insurance FAQs and Answers

Life Insurance and Millennials

5 Things to Keep in Mind While Buying Life Insurance Policy

Why Do Life Insurance Agents Avoid Selling Term Plans?

Can a Term Plan be the Substitute for a Retirement Plan?

Savings cum Protection Plans Secures Your Family from Unforeseen Events

All about Your Rights and Duties While Buying Life Insurance Policy

How to Customize Your Life Insurance Policy with Riders

Difference Between Term Insurance and Endowment Plan

Most Common Life Insurance Riders to Enhance Your Existing Policy

Important Features of a Term Insurance Plan

Types of Life Insurance Policies in India

Compare Different Life Insurance Products Offered By Kotak Life

Term Insurance for Home Loan: How Term Plan Helps in Paying Off Home Loan?

Customer Awareness on Information Security

Why You Should Never Cancel Life Insurance Policy

Term Plan with Return of Premium (TROP)

How Much Life Insurance Costs and How Much Insurance Cover You Need?

All You Need to Know About Life Insurance - Its Benefits, Features, and Types of Life Insurance

Life Insurance Policy Closure

How Much Life Insurance Cover Do I Need?

Why Buying a Term Insurance is Important for all Parents

Biggest Life Insurance Myths

Is it Worth Buying Disability Rider on Term Insurance?

What Should One Expect During the Medical Evaluation for Life Insurance?

6 Different Types of Insurance Policies

What Is Surrender Value (Cash Surrender Value) in Insurance and how is it calculated?

Is Life Insurance an Investment?

Choosing a Life Insurance Beneficiary

Should You Buy Life Insurance After Getting Married?

How Many Insurances Should I Have?

How to Use Different Types of Life Insurance for Retirement Planning?

Why Online Term Insurance Plans Cheap?

Loan Against Life Insurance Policy

Why Renewal of Term Insurance Plan is Important

Digital Life Certificate for Pensioners Seeking Pension

Is it Possible to Reduce Life Insurance Premium without Affecting Sum Assured?

वरिष्ठ नागरिकों के लिए ऑनलाइन टर्म इंश्योरेंस प्लान खरीदने के लिए गाइड

How Do Term Insurance Plans Differ for Smokers?

FAQs on Life Insurance

Staying Insured While Investing

Does Life Insurance Pay for Suicidal Death?

भारत में जीवन बीमा पॉलिसियों के प्रकार