Understand how the premium payment frequency affects your term insurance plan.
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The following points will explain the working of premium payment frequency.
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 Indian 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 premium 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 for 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.
A premium payment frequency in Term Insurance is how often or the number of times that you need to pay for your premiums. Insurance companies offer convenient payment frequencies which include monthly, quarterly, bi-annually, and annually.
Your premiums are determined according to certain criteria that your insurance company lists out. These criteria may include your health and lifestyle habits, age, gender, and job or income details. The lower the risk you present to your insurance company, the lower your premiums will be.
In case you miss a premium payment, you still have a grace period to pay in. Although grace period times depend on the insurance company, they're generally about 15 days from your actual premium payment date.
Yes, you can change your premium payment frequency to suit your changing lifestyle and needs. You may apply online or in person at your insurance company’s branch office.
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.