Payment Mandates in Term Insurance

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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What is a Payment Mandate in Term Life Insurance?

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.

What are the Types of Term Life Insurance Payment Modes?

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.

Online Payment

Many insurance companies give you the option to pay for your premiums online.

Insurance company’s payment gateway: One of the safest ways to pay for your premiums is through your insurance company’s payment gateway. Most insurance companies provide an option to register for an account and then make a payment with your registered details. Although payment modes vary by insurance companies, many offer Internet banking, UPI, debit and credit cards, EMIs, and more.
Internet banking: If your policy supports Internet banking, you can pay premiums from your bank's Internet Banking Facility.
Through e-wallets: Digital India provides easy ways to make online payments, including your premiums. You may be familiar with UPI payment methods and can pay your premiums with them!
Foreign remittance: Even if you move overseas or do not live in India, you can pay your premiums online or through foreign exchange or wire transfer from an international bank.

Offline Modes of Premium Payment

Not a fan of online premium payments? You can use offline premium payments to pay for your term life insurance.

Payment at Branch: Your insurance company may have offices throughout the country or affiliate offices. Visit your insurance company’s nearest office to pay for your premiums by cash deposit, check, or with a demand draft. In addition, you can pay with a debit or credit card.
ECS Payment: When you choose an ECS payment mode, your premiums will be debited from your bank account to your insurance company on a fixed date. You can set up an ECS payment mode by submitting the ECS mandate documents to your insurance company and then allowing your bank to authorise your insurance company to make withdrawals on your behalf towards your Term Life Insurance policy. Select this payment option if you know you'll have sufficient balance in your bank account over the course of your policy.

Benefits of Setting up Auto-Payment 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.

What happens if I don't set a payment mandate or pay my premiums?

Here are the two most common and critical issues you want to avoid.

Missing the premium payment date:

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.

Lapses in your policy

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.

What Mandates do I Need to Follow to Buy a Term Insurance Plan?

The following are a few of the mandates you need to follow

Proof of identity

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.

Proof of address

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.

Health records

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.

Income Tax Return

You can manage your premium payouts and amounts based on your income tax return.

Outstanding amounts and expenses

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.

Frequently Asked Questions

Here’s a list of common questions and answers related to Payment Mandate in Term Life Insurance.

Can a bank withdraw money for premium payment directly?

Your bank can withdraw money directly if you have set up the relevant payment mandate.

How can I update my bank account information for premium payments?

Contact your insurance company's customer service to update your bank account details.

When can my policy lapse?

If you don't pay your Term Life Insurance premiums, your policy will lapse and be terminated.

What happens if I miss my Term Life Insurance premium payment date?

Yes, you can make the payment after missing the premium payment date based on the applicable grace period.

Is there a penalty for insufficient funds when auto-debits are attempted?

Yes, penalties may apply. Explore your policy for specifics.

Can I cancel my auto-payment mandate at any time?

Yes, you can cancel anytime by notifying your insurance company.