With a life insurance policy, you secure your family's financial future in case you suddenly pass away. Most policies offer your loved ones a death benefit or sum assured to keep them financially independent and help them get back on their feet. Here, a Term Insurance (TI) policy covers you for a term or a certain number of years. Usually, most Term insurance policies are from anywhere between 1 to 30 years. To keep the policy active, you need to pay an insurance premium. Read ahead to learn more about the premium payment frequency in Term Insurance.
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A premium payment frequency in Term Insurance policy is how often you have to make your premium payments. Most insurance companies offer you premium payment frequencies as follows.
The different types of frequencies will also determine your entire premium payment amounts. Generally, annual payments offer the lowest premium amounts because there are usually yearly discounts available to you. Paying in smaller amounts more frequently usually costs more because of the higher number of payments you will have to make.
The following points will explain how premium payment frequency works.
You can get rebates when you pay your premiums online. Usually, online payments help your insurance company save big on processing fees and finances, so they pass the savings on to you. You can get rebates for premium payments that you make towards a higher sum assured value.
According to the India Insurance Regulatory and Development Authority (IRDA), you can make premium payments in cash only for amounts up to Rs. 50,000. Premium payments beyond this amount need to be made via netbanking, check, or online payments.
Your premium values are based on your health status and lifestyle habits. The healthier you are, the lower your premiums will be. When you apply to purchase a policy, you will have to undergo a medical check to assess your health and screen for any pre-existing medical conditions. What's more, you will be asked about your smoking and drinking habits. These measures are used to determine your risk value to the insurance company and how much they will have to pay as premiums for your policy.
If you're deemed as high risk to your insurance company and the policy you're looking for, you'll be issued a loading condition. Loading is used in policies for people with health conditions, who work in hazardous environments, and/or with hobbies labelled dangerous or risky. The higher the loading amounts for your policy, the more you'll have to pay in premiums.
Term Insurance policies offer you level premiums. A level premium is a premium payment amount that stays the same for the duration of your policy. Even if interest rates affect the market or if currency values change, your premium payments will be the same until your term policy expires. One of the benefits of a level premium is that you don't have to worry about external factors influencing your payments.
Insurance companies stipulate that you make your premium payments on time. In case you miss a payment, you can still use the premium payment grace period. The grace period allows you a certain number of days to make your payment. Usually, a grace period is around 15 days, although this depends on your insurance company. If you miss the grace period payment as well, your policy may lapse or be terminated.
Efficient management of premium payments ensures that your policy remains in force without causing a financial burden. Here are some tips:
Set up automatic debits from your bank account to ensure payments are never missed.
Use digital calendars to set reminders for due dates, especially if you pay quarterly or annually.
If you hold multiple policies, consider synchronising payment dates to streamline your finances and reduce the chance of forgetting a payment.
Premium payments for term insurance can also carry legal and tax implications, which are important to consider:
In many jurisdictions, the premiums paid on term life insurance can be tax-deductible. This depends on local tax laws and should be confirmed with a tax professional.
Ensure all premium payments are well documented. This helps in legal scenarios where proof of continuous coverage, such as estate planning or financial audits, might be required.
Here’s a list of common questions and answers related to premium payment frequency in Term 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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