How Can You Benefit from Limited Pay Term Insurance Plans?

Written by : Knowledge Centre Team

2026-02-12

870 Views

8 minutes read

Introducing BSE 500 Enhanced Value 50 Fund with Promise4Wealth

50 High-Potential Companies, One Smart Decision

Name is required Name should be Valid

Mobile Number is required Mobile Number should be Valid

Email is required Email should be Valid

DOB is required DOB should be Valid

Annual Income*

< 3 3-5 5-7 7-10 > 10

Annual Income is required

I agree that even if my contact number is registered with NDNC / NCPR, I would still want the Company to contact me on the given number and email id for the clarifications/product information sought by me and agree that I have read and understood the Privacy Policy and agree to abide by the same.

Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

Are you planning to buy a term insurance cover? If yes, you might find the limited premium payment option an attractive feature. In fact, you may even want to pay the entire premium in a single instalment.

Yet, you might think that there must be a catch here since, how could anything be this amazing and not have a hidden cost. Let’s find out.

What is Limited Pay Option in Term Plan?

The usual premium payment term of any life insurance plan, including the term plans, is equal to the policy term. For example, if you are 30 years of age and buy a 30-year life insurance policy:

You will pay 30 annual premiums, or
Until there is a death claim on the policy and policy terminates

So, unless there is a death claim after which the policy will be over, you will need to pay the premiums.

Limited pay option is a feature in life insurance plans where you can pay all the due premiums within a much shorter time frame. For example, within five years for a policy that will continue, if without claim, for 30 years.

Why Do You Need Limited Pay Option?

Life insurance in any form is usually a long-term commitment. Often, it is difficult to predict the type of changes you may face over these many years. At times you may even have plans for yourself as well.

Scenarios when you will find limited premium option useful:

You plan a major career shift – from job to business
Looking forward to a sabbatical in near future
Buying a Whole Life Cover

As you can imagine, you would want to keep your financial commitment at a low while planning and executing major career shifts or while going for higher education. The limited premium payment option relieves you from the burden of paying the insurance premiums at such times.

In the case of whole life plan, you will anyways need to use limited payment term so that you can finish paying all the premiums before your retirement.

Advantages of Limited Premium Payment

Apart from being useful in continuing the life cover in financially difficult times limited premium payment term offers more advantages.

Enjoy A Discount on Premiums

Limited Premium Payment is a great option that lest you remain covered for longer, while you pay less number of premiums. It is great when you want to pay the premiums while you are still working and have a regular income, while you can stay covered even when you retire.

Limited payment option also allows a discount on the total premium. Shown below is a table of limited payment options under the iSelect Smart360 Term Plan, and it is evident that the faster you pay the premiums the lower the total premium payment gets.

Is There Cover of Covid-19 Infection in Regular Health Insurance Policy?

According to guidelines issued by the IRDAI (Insurance Regulatory and Development Authority of India), all the claims related to Covid-19 treatment (including quarantine period) will be eligible to gain coverage under a standard health plan. It will be there to help the insured with the normal cover on hospitalization for all viral infections, including Corona. All the features you enjoy under your chosen health insurance plan will also apply to Covid-19 treatment. But to avail treatment through your medical insurance, you must be hospitalized at least for 24 hours. In the event of hospitalization, all your expenses will be covered for treatment of disease, including pre and post hospitalization expenses.

Utilize Higher Tax Benefit: The life insurance premium you pay reduces your tax liability for the financial year, with a rebate under section 80C. Considering the maximum 80C limit is Rs. 1.5 Lakhs you have ample space to save taxes using life insurance premiums.

We know that the annual premium for a Rs. 1 crore term plan comes around just Rs. 12,000, if you are 30 years of age. But if you decide to pay all the premiums for the next 30 years within the next 5 years your premium would be slightly more than Rs. 45,000.

Avoid Policy Lapse- If anything, the recent COVID-19 situation has taught us, it is the importance of preparedness for an emergency. We have seen how fast the economic situation can turn upside down. And the last thing you would want in such times is your insurance plans to lapse. So, the limited premium payment option also saves the life cover (and the associated benefits) from lapsing due to unpaid premiums.

So, you can see there are multiple ways you can take advantage of the limited payment term and enjoy continuous insurance cover, that too at a discounted premium rate. This is especially useful in a term plan, as you would want the cover to continue regardless of the long-term financial situations.

Protect Your Family with Affordable Term Insurance

Full Name* Please enter correct name Please enter the Full name

Mobile Number* Please enter valid mobile number Please enter Mobile Number

Email* Please enter valid email Please enter Email

By submitting my details, I request the company to call me and override my NDNC/ NCPR registration and authorize the Company and its representatives, including its third-party vendors, to validate, evaluate and process this proposal and also to contact me via email, phone, WhatsApp or any other mode. I also provide my consent to share my IP address & location to the company for risk assessment. I confirm that, I have read and understood the Company’s Privacy Policy and agree to abide by it

...Read more Consent is required

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Make sure that your term insurance claims are never rejected

What Medical Test are Required to Buy Term Insurance?

Recent Blogs

Term Insurance - Top Selling Plans

Canara HSBC Life Insurance offers online term insurance plans to secure your family financially in your absence.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan

3 Plan options
Life cover till 99 years
Steady income benefit
Block your premium at inception

Start Young, Pay Less, Stay Secured

Young Term Plan

Life cover till 99 years
Coverage for spouse
Block your premium rate
Covers 40 critical illness

Family Shield: Enhanced Protection

Saral Jeevan Bima

Affordable prices
Multiple premium payment option
Get Tax benefits
Hassle-free purchase process

How to Make the Most of the Limited Pay Option in Term Plan?

What is Limited Pay Option in Term Plan?