What is a single premium ULIP?

A single premium ULIP requires a one-time lump sum payment upfront, securing both insurance coverage and investment for the policy term.

What is a regular premium ULIP?

A regular premium ULIP involves periodic payments (monthly/quarterly/annually) to keep the policy active and benefit from long-term wealth creation.

Which offers better tax benefits?

Regular premium ULIPs allow annual tax deductions under Section 80C (up to ₹1.5 lakh per year). Single premium ULIPs offer a deduction only in the year of payment.

Which is more affordable?

Regular premiums are budget-friendly as costs are spread over time. Single premiums require a large upfront investment but may include discounts.

How does market risk differ?

Single premium ULIPs expose you to market timing risk. Regular premiums benefit from rupee cost averaging, reducing volatility impact.

Can I add riders later?

Regular premium ULIPs often allow adding riders (e.g., critical illness). Single premium plans usually lack this flexibility.

What happens if I miss a regular premium?

Missed payments may lead to a lapse or reduced benefits. Insurers often provide a grace period or revival options.

Which is better for long-term goals?

Both suit long-term goals, but regular premiums encourage disciplined investing. Single premiums work best for those with surplus funds.

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Disclaimer: # The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. All plans listed here are of insurance companies’ funds.

Single Premium vs. Regular Premium ULIP Plans

Unit Linked Insurance Plans (ULIPs) are popular financial products that combine investment and life insurance. One of the key decisions when purchasing a ULIP is choosing between a single premium and a regular premium payment option. Both approaches have distinct features, benefits, and drawbacks that cater to different investor needs and financial situations.

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What Are Single Premium ULIP Plans?

Single Premium ULIP Plans are a type of Unit Linked Insurance Plan where you pay the entire premium upfront as a lump sum at the start of the policy. This one-time payment covers both your life insurance and investment components for the entire policy term, eliminating the need for future premium payments.

In these plans, a portion of your lump sum premium goes towards life insurance coverage, while the rest is invested in market-linked funds such as equity, debt, or balanced funds, based on your risk appetite. The returns depend on the performance of these funds, offering the potential for wealth creation alongside insurance protection.

Single Premium ULIPs are ideal for investors with surplus funds who prefer a hassle-free, one-time payment without worrying about missing premiums or policy lapses. They also often come with discounts on ULIP charges due to the lump sum payment.

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What are Regular Premium ULIP Plans?

Regular Premium ULIP (Unit Linked Insurance Plan) plans are financial products that combine life insurance with investment. In these plans, you pay a pre-fixed premium amount at regular intervals, such as monthly, quarterly, half-yearly, or annually, throughout the policy term. Each premium payment is split: a portion goes towards providing life insurance coverage, while the rest is invested in market-linked funds like equity, debt, or a mix, based on your risk appetite and financial goals.

Regular premium ULIPs are designed to promote disciplined, systematic investing, making them more affordable since the financial commitment is spread over time rather than requiring a large lump sum upfront. ULIP Tax benefits can be claimed every year under Section 80C for each premium paid. Additionally, regular contributions help average out market volatility, potentially reducing investment risk over the long term.

Key Differences Between Single Premium and Regular Premium ULIP Plans

Feature	Single Premium ULIP	Regular Premium ULIP
Payment Mode	One-time lump sum	Periodic (monthly/quarterly/annual)
Affordability	Requires substantial upfront capital	More affordable, spread over time
Convenience	No worries about payment deadlines	Requires regular tracking and timely payment
Tax Benefits	Deduction only in the year of payment	Annual deductions for each premium paid
Risk	Higher, as investment timing is fixed	Lower, benefits from rupee cost averaging
Customization	Limited add-ons/riders	Can add riders and increase cover over time

Pros and Cons of Single Premium and Regular Premium ULIP Plans

Single Premium ULIP Plans:

Pros:
- Hassle-free, one-time payment—no risk of missing future premiums.
- No fear of policy lapse due to non-payment.
- Suitable for those with surplus funds or irregular income.
- Potential discounts for lump sum payment.
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Cons:
- Large upfront outlay may not suit everyone.
- ULIP Tax benefit is limited to the year of payment.
- Less flexibility to add riders or increase cover later.
- Exposed to market volatility at the time of investment.
Regular Premium ULIP Plans

Pros:
- Spreads out the financial commitment, making it more affordable.
- Enables annual tax benefits under Section 80C for each year premiums are paid.
- Rupee cost averaging helps mitigate market volatility risk.
- Greater flexibility to add riders and enhance cover.
- In case of the policyholder’s demise before maturity, future premiums are not required, but benefits continue.
Cons:
- Requires discipline and regular income to avoid policy lapse.
- Missing payments can lead to discontinuation and lower returns.

Which ULIP Premium Option Should You Choose?

The choice between single and regular premium ULIP plans depends on your financial situation, investment style, and insurance needs:

Opt for Single Premium ULIP if:
- You have a lump sum available for investment.
- You prefer a hassle-free, one-time transaction.
- You want to avoid the risk of missing payments or lapsing the policy.
Opt for Regular Premium ULIP if:
- You prefer spreading out your payments.
- You want to maximize annual tax benefits.
- You value flexibility and the ability to add riders over time.
- You wish to benefit from rupee cost averaging in volatile markets.

Additional Considerations

ULIP Charges

Both single and regular premium ULIPs have various charges such as fund management, mortality, and premium allocation charges. Understanding these [ULIP charges] is crucial to evaluating the overall cost and potential returns of your ULIP investment.
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Use to compare plans, estimate returns, and understand the impact of charges and premium payment modes on your investment outcome.

Conclusion

Both single and regular premium ULIP plans offer the dual advantage of investment and insurance. Your decision should be based on your cash flow, risk appetite, tax planning needs, and convenience preferences. Assess your financial goals carefully to choose the ULIP premium payment mode that aligns best with your long-term objectives.

FAQs

What is a single premium ULIP?

A single premium ULIP requires a one-time lump sum payment upfront, securing both insurance coverage and investment for the policy term.
What is a regular premium ULIP?

A regular premium ULIP involves periodic payments (monthly/quarterly/annually) to keep the policy active and benefit from long-term wealth creation.
Which offers better tax benefits?

Regular premium ULIPs allow annual tax deductions under Section 80C (up to ₹1.5 lakh per year). Single premium ULIPs offer a deduction only in the year of payment.
Which is more affordable?

Regular premiums are budget-friendly as costs are spread over time. Single premiums require a large upfront investment but may include discounts.
How does market risk differ?

Single premium ULIPs expose you to market timing risk. Regular premiums benefit from rupee cost averaging, reducing volatility impact.
Can I add riders later?

Regular premium ULIPs often allow adding riders (e.g., critical illness). Single premium plans usually lack this flexibility.
What happens if I miss a regular premium?

Missed payments may lead to a lapse or reduced benefits. Insurers often provide a grace period or revival options.
Which is better for long-term goals?

Both suit long-term goals, but regular premiums encourage disciplined investing. Single premiums work best for those with surplus funds.

˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*Past 10 Year annualised returns as on 01-05-2025
*All savings plans are provided by the insurer as per the IRDAI approved insurance plan. Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 2 Cr. is for a 30 year old healthy individual investing Rs 18,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: 1,06,79,507 @ CAGR 4%; 2,12,15,817 @ CAGR 8%. All plans listed here are of insurance companies’ funds. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years' fund performance data (Fund Data Source: Value Research).