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What Are the Premium Payment Options Available for a Term Insurance Plan?

27-07-2022 |

Life insurance is an essential component of an adequate financial plan since it safeguards the financial strength of your family in the wake of your untimely demise. Purchasing a life insurance policy also offers you the stability necessary to balance your financial commitments throughout your life.

In this context, a term insurance plan is the simplest form of life insurance within which the selected insurance company promises to pay the sum assured under the policy to your family in the event of your passing within the plan term.

However, despite its simplicity and multiple benefits, term life insurance is seen as a complex instrument by many. Therefore, very few people end up buying a term insurance policy at the right stage in their lives. In this context, let us dispel a few such myths and see how a term insurance policy can be utilised to optimise your financial goals.



Understanding Term Insurance

In a term insurance contract, the policyholder agrees to pay regular premiums for a predetermined number of years in return for life cover provided by the selected insurance company. Should the policyholder die during the policy term, the insurance company will pay the sum assured under the policy to the family of the deceased.

As times and preferences of people have evolved, insurance companies have realised the need to add new and useful features to their basic term life insurance policies. The aforementioned approach and attention to the ever-evolving needs of policyholders have increased the penetration of insurance coverage in the country. However, a significant proportion of the population remains uninsured; therefore, it is necessary to enhance the level of public awareness of the many benefits of an insurance policy.



How Long Should I Pay Term Life Insurance Premiums?

The premiums on term insurance policies are paid over the premium payment term, which is usually between 5 years and 45 years, depending on the specific conditions mentioned in the policy. It is important to note that the payment term is computed according to the age of entry, the sum assured, the coverage period, etc. In this context, the coverage period and policy term are the number of years for which life cover will be provided under the policy.



How can I Pay for Term Insurance Plans?

A life cover under a term insurance plan is available on the payment of regular premiums. If you wish to ascertain the premium amount you would have to pay, you can use the online premium calculators available at the websites of different insurance companies or advisory sites. In the aforementioned calculator, you should input details such as the age of the applicant, the amount of sum assured, the premium payment period, the policy coverage period, lifestyle habits such as smoking, and pre-existing illnesses, if any.

You can also add the riders you wish, to the policy and determine the total premium payable. It is important to note that term insurance premium payment should preferably be made online as the process is quick and transparent. The Tata AIA term life insurance plan, for instance, offers five different premium payment modes which have been listed below.

  • Annual

  • Quarterly

  • Half-yearly

  • Monthly

  • Single payment

The annual or single premium mode is the most suitable option if you have uneven inflows of income. In this context, the one-time payment for term insurance could be an adequate selection if you have a significantly large amount that you wish to use for buying an insurance policy. You can also choose the limited payment option in which premiums can be paid for a fixed number of years within the policy term.



Are Term Insurance Premiums Set to Increase in 2023?

Term insurance is an instrument for securing long-term life coverage which is why it has low premiums, particularly if you buy the policy at a young age. However, even if you buy a term policy at an older age, say 40 to 50 years, the premiums will be higher but cheaper than the outflows on most other types of financial security products.

It is better to get life cover at the earliest possible time, and it is never too late as term insurance policies help cover all exigencies of life, as the recent pandemic made us aware of. It is worth noting that premium is computed based on medical history and other predisposing factors that increase with age.



Some Other Features of a Term Insurance Policy.

  1. Affordable premiums

    Nowadays, insurance companies offer attractive features in their term insurance policies. For anyone beginning their financial journey, a term life insurance policy is usually the first and the easiest step. Therefore, the premium for term insurance policies is the lowest among all types of insurance plans. The main reason for low premiums is that term insurance plans generally last a long period and insurance companies estimate death risk to be significantly low over a longer period considering the insurer’s age, lifestyle habits, absence of pre-existing illnesses etc.

  2. The age of entry and the extent of the coverage

    There is nothing to stop you from buying a term insurance policy at an older age. For example, in the Tata AIA term life insurance plan, the maximum age of entry can be 65 years in certain cases and the life cover is offered up to the age of 100 years subject to terms and conditions. However, it is advisable to buy a term insurance plan as early in life as possible.

  3. The option to add life insurance policy riders#

    You can choose to add optional riders# to your term plan to have coverage for the cost of medical consultations, online consultations, and the waiver of future premiums on the diagnosis of critical illness or disability during the policy term.



Conclusion

The uncertainties of life should not deprive your family of a stable lifestyle and the pursuit of their aspirations. The financial bottlenecks that arise when the primary earning member of a family dies have been brought into sharp focus during this pandemic. Therefore, to secure your family’s happiness and safeguard their future goals, you must opt for a suitable term life insurance plan soon; it is much cheaper than you think and much more beneficial than many others think!

L&C/Advt/2022/Jul/1664

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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Need more information?
Let us help you

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

Looking to get a new plan? 
Connect with us now

+91

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

People Like You Also Read

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Read More
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Read More
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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimers

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch.

Need more information?
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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.