A life insurance policy guarantees your family's financial future in case of your untimely demise. Most policies offer your loved ones a death benefit or sum assured to keep them financially independent and help them recover. Here, a Term Insurance (TI) policy covers you for a term or a certain number of years. Usually, most term insurance policies are for people aged 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 yearly discounts are usually available to you. Paying in smaller amounts more frequently usually costs more because of the higher number of payments you must make.
Here's a breakdown to make things crystal clear on how premium payment frequency works:
Many Life Insurance companies offer discounts or incentives, especially if you pay your premiums online. You would want the insurance companies that offer benefits for using certain payment methods, as online payments can reduce administrative costs for the insurer. Discounts are often offered to pay premiums in larger amounts or for policies with higher sums assured.
The Insurance Regulatory and Development Authority (IRDA) of India states that insurance premium payments can only be paid in cash for amounts less than ₹50000. For anything over this amount, you are required to pay through net banking, a check, or online modes of premium payment.
The premium paid in part depends on your health and the kind of lifestyle you lead. Healthier customers commonly receive the pleasure of paying less premium costs. An assessment is carried out on registration to consider your current or past health, including medical history.
A loading condition may be used when the insurer considers the applicant a high-risk candidate. Loading is normal for people with chronic illnesses, those with dangerous jobs or hobbies, and many more. This means that if you load up your Life Insurance Premium payment, then you are in dire need of paying a higher amount for your policy.
Most Term Insurance Policies come with level premiums. As for level premiums, the fixed payment remains constant for the entire policy term, irrespective of the change in market interest rates and even currency values. This gives a definite payment for the insurance premiums until the policy is over.
Most insurers set certain financial conditions to pay premiums, which must be paid promptly. When this happens, further time to pay is given, usually about 15 days from the date the payment was initially due. Losing this extra online premium payment period may cause policy cancellation or non-renewal dictated by the insurer’s policy.
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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