When buying term insurance in 2025, one critical decision affects both your cash flow and
long-term savings - should you pay the entire premium once upfront (single
premium) or pay regularly every year?
A single-premium term plan offers convenience and small overall savings but
locks up a large sum at once. A regular-premium plan spreads payments
yearly (or monthly), keeping your liquidity intact and maintaining flexibility to upgrade or
switch.
This comparison explains how each works, breaks down cost vs benefit over time, and shows
which plan suits your age, cash-flow pattern, and investment style. Whether you’re a
salaried professional or business owner, use this 2025 guide to choose the structure that
fits your financial rhythm.
Understanding the Two Payment Modes
Single Premium Term Plan
- One-time payment for the entire policy term.
- Coverage remains valid for 10 - 40 years (as chosen).
- Lower total outgo vs sum of annual premiums.
- Eligible for 80C deduction in the year of payment only.
Ideal for: Buyers with surplus funds or one-time bonus income.
Regular Premium Term Plan
- Premium paid annually, half-yearly, or monthly.
- Easier cash flow management; tax benefits every year.
- Flexibility to upgrade riders, increase cover, or port.
Ideal for:Working professionals, families, and long-term planners.
Calculate 5-Year Cost
Difference →
Cost Comparison (₹1 Cr Cover, 30-Year Term)
| Mode |
Payment Frequency |
Total Outgo |
Tax Benefit |
Liquidity Impact |
| Single Premium |
₹2,00,000 (one-time) |
₹2,00,000 |
80C (one year) |
Low (liquid cash locked) |
| Regular Premium |
₹10,000 × 30 years |
₹3,00,000 |
80C each year |
High (flexible) |
Even though single-premium looks cheaper upfront, inflation-adjusted returns on the saved
cash often favor regular plans.
Effective Cost & Return Analysis
Assume ₹2 L (one-time) invested in single premium vs regular plan + investment.
- Regular Plan: Pay ₹10,000/year; invest remaining ₹1.9 L in mutual fund @ 8% return.
- After 30 years → ₹1.9 L becomes ~₹19 L while your life cover continues.
Result: Regular plan + investment outperforms single premium by many
times in total wealth.
Pros and Cons
| Aspect |
Single Premium |
Regular Premium |
| Convenience |
One-time payment |
Ongoing payments |
| Liquidity |
Low |
High |
| Flexibility |
Locked |
Can upgrade riders |
| Tax benefit |
One-time |
Every year |
| Ideal for |
Lump-sum earners |
Salaried buyers |
| Overall ROI |
Moderate |
Higher (long-term investment advantage) |
Who Should Choose Which
Choose Single Premium If:
- You receive large one-time income (bonus, property sale).
- You don’t want future payment commitments.
- You prefer no auto-debit risk or renewal reminders.
Choose Regular Premium If:
- You value liquidity and cash flexibility.
- You want to claim tax benefit every year.
- You plan to add riders or change coverage later.
Real-Life Scenarios 2025
| Profile |
Best Option |
Reason |
| 30 - yr Salaried Professional |
Regular Premium |
Easier cash flow + tax benefit each year |
| 45 - yr Business Owner |
Single Premium |
High liquidity now, prefers one-time payment |
| NRI Investor |
Single Premium |
Simpler maintenance + lump-sum payment |
| Young Family (2A+1C) |
Regular Premium |
Ongoing tax benefits + riders |
Tax Comparison (Section 80C & 10(10D))
| Feature |
Single Premium |
Regular Premium |
| Deduction Eligibility |
Year of payment only |
Every financial year |
| Limit |
₹1.5 L under 80C |
₹1.5 L per year |
| Payout Tax |
Exempt under 10(10D) |
Exempt under 10(10D) |
FAQs
What is the difference between single and regular premium plans?
Single = one-time payment; regular = installments throughout the policy term.
Which is cheaper in the long run?
Regular appears costlier nominally, but offers better liquidity and investment returns.
Can I convert my regular plan to single premium?
No mid-term conversion - must buy new policy.
Do both offer same life cover?
Yes, coverage remains identical for the chosen sum assured.
Do I get refund if I survive?
Only if plan includes Return of Premium option (ROP).
Which gives better tax benefits?
Regular - you can claim 80C every year.
What if I miss a premium in regular plan?
Grace period applies (15-30 days); policy may lapse if not paid.
Are single premium plans cheaper overall?
Slightly lower total outgo, but you lose liquidity and annual benefits.
Is loan available against single premium plan?
Possible for some endowment type plans; not for pure term.
Which option suits NRIs better?
Single premium - simple payment and no future renewal dependencies.
Buy Your Term Plan Online →
Customer Reviews
- “Paid once and forgot - single premium worked for me.” - Ravi Menon,
- “Regular plan made more sense for steady salary and annual tax benefit.” -
Sneha Iyer,
- “Used the saved cash to invest in SIP - better returns.” - Vikram Desai,
- “PolicyBachat calculator showed real cost difference clearly.” - Kavya
Sharma,
- “Single premium felt easy but locked my cash; regular is more flexible.” -
Rajesh Rao,
- “Great comparison - numbers don’t lie.” - Meera Nair,
PolicyBachat Advantage
- Compare single vs regular term plans side-by-side.
- Instant premium difference and tax impact calculator.
- 20+ IRDAI-approved insurers in one dashboard.
- Free Claim Assist and renewal reminders.
- Instant digital purchase - policy PDF in minutes.
PolicyBachat Tip
“Single premium buys convenience. Regular premium buys flexibility. Choose based on how you
earn and invest.”
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