Ensuring your loved one's financial well-being is a thoughtful decision, and Term Life Insurance can provide that peace of mind. For your family to receive the benefits of your insurance policy, you will need to pay your premiums within this term. Failure to make payments could lead to your beneficiaries having difficulty receiving their payouts. By opting for a Payment Mandate, you can streamline the process, ensuring that your premiums are paid on time without the hassle of manual transactions. In this article, we explore Term Life Insurance Payment Mandates, the types of premium payments available, and the documents you'll need to get started.
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A Payment Mandate is a contract which says that you approve auto-debits from your bank towards your premium payment regularly. These are useful ways to make sure that you pay your premiums fully and on time so that your loved ones benefit from the amount. Since a Term Plan is for a set period of time, you will need to pay your premiums on time within this term. In general, you pay your premiums on a yearly basis, although this frequency depends on your policy and insurance company.
When you set up a Payment Mandate, you are allowing your insurance company to debit your premium payments from your bank. It is a legally binding document, so be sure you read it carefully and understand the terms and conditions underlined in it.
When you set up auto-payment for your insurance plan, you never have to miss a premium payment again! Usually, these are the main types of premium mandates.
Setting up auto-payment mandates for term insurance premiums benefits in several ways. Some of the common advantages include:
| Timely Payments: It ensures premiums are paid punctually, completely avoiding the risk of policy lapses. | Convenience: Eliminating manual payment intervention offers a hassle-free premium payment process. |
| Policy Lapses: It simply streamlines and helps prevent policy termination due to missed payments, meaning continuous coverage. | Peace of Mind: It assures you that premiums are automatically deducted. This completely reduces the burden of remembering and hassling to pay premiums before due dates. |
Here are the two most common and critical issues you want to avoid.
If you miss your premium payment date, you can quickly pay within the grace period your insurance company specifies. The Grace period in term insurance is a certain time frame where you can pay for your premiums without incurring additional fines. Although premium payment grace periods vary, insurance companies may offer around 30 days grace for yearly payments and 15 days for other payment frequencies.
If your premiums aren't paid after the grace period provided, the company will make your Term Life Insurance "lapse" and terminate the plan without notifying you. This process is usually outlined in the Payment Mandate, which is why it's so important to go through it. If your policy has lapsed, you can request that your term life insurance be reinstated. Many insurance companies offer policy reinstatement in a certain time frame.
The following are a few of the mandates you need to follow
You need a photo ID, such as your passport, driver's licence, PAN card, or Aadhaar card. This proof of identity will verify your name, age, and other details.
A proof of address can be your utility bill (electricity or water bills) or bank statement. If you're renting, you will need a No Objection Certificate from your landlord. In addition, you could also submit your Aadhaar card as proof of address if you live at the address mentioned.
Most insurance companies need you to complete a health screening or medical examination when you apply. Be sure to have handy the results of your medical examination and other relevant health records. This will help the insurance company calculate your premiums and coverage.
You can manage your premium payouts and amounts based on your income tax return.
Ensure you are transparent about your expenses and outstanding amounts, including debts, mortgages, and loans. Your insurance company is your assistant in helping you determine how much coverage your beneficiaries need. Explore the ACKO Life Flexi Term Plan, a unique plan with unmatched flexibility that adapts to your changing circumstances and financial requirements. This life insurance plan from ACKO offers comprehensive coverage to secure your loved ones' future with affordable premiums.
Opting for auto-payment mandates for term insurance premiums is a smart move. It ensures timely payments, offers convenience, and prevents policy lapses, amongst other benefits. Life can get hectic, causing important tasks to slip out of your mind. Neglecting to establish an auto-payment mandate can result in missing payment deadlines.
Here’s a list of common questions and answers related to Payment Mandate in Term Life Insurance.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet and is subject to changes.
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Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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