Types of Term Insurance Premium Payment Options
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Term insurance is becoming more popular as it offers a comprehensive life insurance policy at a low premium rate. In a term insurance policy, the insurer covers the death of the life assured for a predetermined policy duration. The premium payment mode is a crucial consideration when purchasing a term plan. Term insurance premiums are often less expensive than other types of life insurance. You must be aware of the various options to select the payment method best suited to your resources. With the assistance of an adviser, you can make your choice based on your needs.
Types of Term Insurance Premium Payment Options
The following premium payment options are available with term insurance.
1. Regular Premium Payment Option
This is the most favoured payment method in which you have to pay premiums on a monthly, quarterly, half-yearly, or yearly basis. This option requires you to pay premiums regularly throughout the duration of the coverage. The standard premium mode is recommended first and foremost due to its affordability. People who have a steady income may find it easier to pay the premiums on a regular basis. Hence, if you are a salaried employee, this option may be more suitable. Also, if you're young and just need coverage until you retire, this choice can help you save money on your overall premiums. During the insurance period, you can also take advantage of Section 80C tax benefits.
2. Limited Premium Payment Option
A limited premium payment plan is when you pay the premium for a shorter period but benefit from the insurance coverage for a longer period of time. People who do not enjoy paying insurance premiums for a long period of time may find the plan handy. If you are not sure you will be able to afford premiums in the future, the limited pay plan is the way to go. This option is best for people with short career spans, such as athletes, those who operate in unpredictable circumstances, such as the army, and business owners or professionals with changing incomes.
3. Single Premium Payment Option
When you acquire the plan, you can pay the complete premium amount in one go with this option. The life insurance coverage is valid for the duration of the policy. As a result, you won't have to worry about organising funds for each due date or about your policy termination due to non-payment. In addition, insurers frequently give considerable deductions on term insurance premiums paid in a single payment. If you have extra cash, you can use this strategy to build resources for your family.
Take Away
After weighing the benefits and drawbacks of different term insurance premium payment options, you should choose a suitable option. The decision should be based on your current financial condition as well as your anticipated future earnings. However, regardless of the payment method, it is crucial to have coverage that would protect your family from financial difficulties in the event of an emergency.
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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
