The Long Read
Everything you *need to know* is right above this. Scroll down, only if you'd still like to read more (honestly, why?)
There are three different premium payment terms that you can opt for:
Single pay - in this, you pay the complete premium amount at once. You can choose this if you have irregular income.
Limited pay - in this, you pay the premiums only up to a certain number of years in your policy period. Choose this if you want to pay off the premiums as soon as possible but feel paying everything at once is not suitable for you.
Regular pay - in this, you pay your premiums regularly till the end of your policy period. Choose this if you prefer to pay premiums on a regular basis
Find out more about the different premium payment terms that you can choose.
You should choose the limited pay option if you want to pay off all your premiums as soon as possible but you feel that single pay will not suit you due to a large amount being paid at once.
Limited pay may interest you especially if you:
You wish to only pay till the time you earn
Work in a volatile industry (such as stock markets)
Have a limited career span (such as an actor, athlete)
Are self employed
Take the KlarifyLife Term Guide and find out if the limited pay option is for you or not.
You need to check which premium payment term can help you pay off all the premiums easily and not make the policy inactive. Your choice should not depend on how much tax you are saving or how much discount you are getting, it should be based on which term you can sustain.
Let’s explore the three premium payment term options in a bit more detail.
Single pay - choose this if you want to pay all your premiums at once. It’s suited for people who have irregular income, such as freelancers.
Limited pay - choose this if you want to pay your premiums as soon as possible but you feel single pay is not suited for you because of the big amount that is paid at once. Further, this option may interest you if you:
Want to retire early and don’t want to pay premiums after your retirement
Work in a volatile industry (such as stock markets)
Have a limited career span (such as an actor, athlete)
Are self employed
Regular pay - choose this if you want to pay your premiums regularly or you want to have the flexibility of changing your policy features. This is suited for salaried employees.
You may have heard that you’d be able to save 45% on premiums if you opt for limited pay instead of regular pay. The saying is not exactly the truth. While you may be able to save, the savings are less than 15%.
So, don’t base your decision on the discount. Choose a premium payment term that you can easily sustain.
Check out how much you can save on premiums by using this tool.
No, unfortunately you won’t be able to change your premium payment term after you have bought the term plan. So, choose your premium payment term carefully while buying the term plan.
Yes, you can. Your current premium payment term will not prevent you from buying riders later on. The premium payment term for your riders will depend on your base plan’s premium payment term and will not be different from it. You can only add riders to your policy on the policy anniversary date.
So for this case, since your base plan has a limited pay premium payment term, your riders will also have a limited pay premium payment term. Do note that riders may have their own eligibility criteria. For example, you may not be offered a critical illness rider if you are already suffering from a critical illness or if you are a transgender.
Well, as a freelancer, you may not get regular income owing to the nature of your work. To sustain limited pay premium payment term, you need to keep paying premiums on a regular basis for sometime during your policy duration (but not the whole duration though). For example, you may be required to pay premiums for the first 8 years of your 20 year policy duration. Paying your premiums regularly and on time for the first 8 years may become difficult for you.
So, it’s advisable that you pay all the premiums of your term policy in one shot, i.e., choose the single pay premium payment term. In this option, you don’t have to worry about paying your premiums on a regular basis to avoid policy lapse.
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