Covid, income fears see shift to single-premium plans. How good are they?

Those buying these plans should bear in mind that gains at maturity may not be tax-free

Individual single-premium life insurance policies are finding many takers today. By September 2020, these policies had garnered Rs 20,494 crore in new business premium during the current calendar year, a 16 per cent increase over the same period last year.

The pandemic has provided a fillip to the demand for these products. People facing income-related uncertainty are choosing to make a one-time payment, instead of committing themselves to large annual premiums.

Capital preservation takes priority: Risk aversion, too, has risen, spurring a shift towards non-participating traditional plans that promise a fixed rate of return upfront. "With the returns on bank