Considering the immense financial safety and peace of mind that a life insurance policy can provide, it is important that every person and family invest in one. When faced with the unexpected, a reliable life insurance policy can help cover for an entire family's current and future needs for years to come.
However, the most frequently asked insurance-related questions are often not about who should buy life insurance, but rather which life insurance to buy and how to pay for it.
The answer to the question of which life insurance to buy varies from individual to individual. However, the most accessible, convenient and economical life insurance option in the market for most families is that of term life Insurance.
This leads us to the next point of how one should make premium payments for said life insurance. This, too, varies from person to person and depends largely on factors such as the access to funds, affordability and convenience of the policyholder. To explore this in detail, let us take a look at the various payment options in term life Insurance as well as their unique advantages:
This is the most common and preferred mode of premium payment used by most policyholders. With regular mode, the premium payments for your term life Insurance are made on a periodic basis, at a regular frequency. The premiums for the policy could be paid yearly, monthly, quarterly, or half yearly based on the individual preference of the policyholder.
Regular premium payments are popular since they result in the premiums becoming quite affordable. As the process of premium payments is stretched over a long period of time, it avoids placing a heavy, one-time financial strain on the policyholder.
It also offers immense flexibility to the life insurance policyholder. This is because if at any time, the policyholder wishes to discontinue the policy due to change in circumstances or reduced liabilities, he or she can do so.
This is one of the less frequently chosen modes of premium payment for life insurance policies. With single premium payments, the policyholder is required to make a one-time complete, upfront payment of premiums, regardless of the duration of his policy.
It might be tempting to believe that a one-time premium payment might prove to be cheaper in the long run. However, financial advisors say that when factored for inflation, single premium payments can often cost policyholders much more than other payment modes.
An advantage of the single premium payment mode, however, is that there will be no non-payment of premiums and that the policy will never lapse. However, most people do not have the means to make a large upfront payment such as required in this case. Hence, people who should buy life insurance with single premium payment are those who can afford the one-time financial burden and want to protect themselves against a policy lapse.
Another option of premium payment for your life insurance is the limited premium payment mode. With this option, policyholders can pay the premium for their entire policy in a limited period of time, such as 5 or 10 years. The premiums payments are therefore taken care of within a short time period while the insurance benefits for the same can continue for a long time.
The downside of limited premium payments is that the premium amounts for this mode are generally higher than regular payments. However, it does have a few key advantages. It is an ideal payment option for those who do not wish to keep paying premiums over a long stretch of time.
It is also a preferred option for those who wish to retire before the term of the life insurance policy ends. By paying off their premiums beforehand, they can reduce the financial burden of premiums from their post-retirement lives.
At the end of the day, who should buy life insurance at which premium payment mode depends on the person’s finances, considerations and individual preferences. Whatever the frequency of premium payment be, you should make sure that your term life Insurance is versatile, efficient and reliable.
To that end, the iSelect Star Term Plan at Canara HSBC Oriental Bank of Commerce Life Insurance is an ideal life insurance option and among the most trusted insurance products in the market. With this term plan, you can avail a wide variety of add-on riders such as Accidental Death Benefit and Waiver of Premium benefit.
These customisations provide you with the coverage you need and guarantee long-term protection from unforeseen events. You can also choose from a variety of payment options and enjoy incredible flexibility in tenures, with options for coverage up to age 80.