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?)
When you buy a term insurance plan, you need to pay your premiums regularly at a pre-decided time. Failure to do this will result in a policy lapse and loss of benefits.
You have the option of choosing how frequently you pay the premiums. Let’s look at the various available options:
Monthly - you pay a fixed amount every month
Quarterly - you pay a fixed amount every three months
Half-yearly - you pay a fixed amount every six months
Annually - you pay a fixed amount every year
You can customise your payment method as per your needs.
There is no right or wrong way in this. You can decide to pay for the premium as per your choice. This decision totally depends on your convenience. For example, if you don't mind making one-time annual payments, then you should go for it, it can help you save up to ~6%. If you think a one-time payment is not your cup of tea and you need an option that is lighter on your wallet then you can opt for a monthly or a quarterly pay-out.
Use the KlarifyLife Term Guide to help you understand which premium payment frequency can suit you.
It is common to miss out the date of paying the premium, especially if you have opted for an annual or a half-yearly pay-out option. The solution is simple. Just activate auto-pay with your bank or your credit card to ensure you never miss out on your premium payments. This will automatically debit the premium from your account to prevent the policy lapse.
If you do not pay premiums on time, your policy may become inactive. This means, your nominees will not be able to benefit from your term policy, i.e. they won’t get a payout. So, it is essential that you pay your premiums on time.
A salaried employee who gets a cash influx every month can consider the monthly payment of the premium option. Since you receive your salary regularly, you can use a part of that salary to pay for the premium. For example, if you receive ₹ 40,000 every month and your monthly premiums are ₹ 500, you can easily pay your premiums on a monthly basis. You can even activate auto pay with your bank or credit/debit cards so that the premiums will be paid automatically every month.
This is just a suggestion, you can choose whichever option you feel suits you or is lighter on your wallet. If you feel that an annual or a half yearly payment will suit you better then go for that.
If you are a freelancer, you should consider opting for a single pay premium payment term instead of regular pay. As a freelancer, you may not receive regular payments and your income may depend on:
Your work projects
When you get those projects
When those projects pay
If you opt for regular pay, you may find it difficult to sustain paying premiums at regular intervals.
An annual or a half yearly premium payment option will also provide you enough time to work and gather up funds for the premium. The inability to pay the premiums on time can cause your term plan to lapse.
Yes, you can change the premium payment frequency after you buy the term plan*. There are no restrictions on changing the frequency from one option to another, for example, you can change the frequency from monthly to annually or annually to half-yearly.
But remember, you can only change it on the policy anniversary date, i.e. the day when you need to review your policy.
*Varies from insurer to insurer. Please check with your insurer for more details.
This will depend on your insurer. Some insurers may charge you for changing the premium payment frequency while others may not. So, it is best to check with your insurer once.
You can change your premium payment frequency either offline or online. Offline, you can visit a branch or contact your insurer to help. In case you need help online, then all you have to do is raise a request online.
Again, this depends on policy to policy and your insurer. So, it is best that you check with them once.
No, changing your premium payment frequency will not impact the payout that your family would be receiving in any way.
We assume that since you are an entrepreneur, you may not always have a regular monthly income. In such a case, the monthly premium payment frequency option may not be best suited for you.
You can instead have a look at the annual premium payment frequency option or the half yearly premium payment option. It may be more friendly to your pocket and will lessen the risk of you missing your premium payments and policy lapse.
You may be able to save 2% - ~6% on your premiums if you opt for the annual premium payment frequency or the half-yearly one. For an exact number you should contact your insurer as it may vary from policy to policy. However, while deciding your premium payment method it is best to choose the one that is easy on your pocket to avoid the risk of payment failure and policy lapse.
Yes, you can. Which mode you used to buy your term policy will not affect whether you can change your premium payment frequency or not. So, if on the date of your policy anniversary, you decide to change the payment method, you can do it both online and offline.
You may be able to save around 5% on your premiums if you opt for the annual premium payment frequency but it is best to check with your insurer once. However, it is best to choose the plan that you can easily work with. Failure to pay the premium can lapse your term plan and leave your family and loved ones stranded in case of your untimely death.
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