Difference Between Policy Term And Premium Paying Term

People often get confused between "policy term" and "premium paying term" when buying term insurance. Both of these terms affect how long your cover lasts and how much you will have to pay. The policy term is the total tenure of your life insurance coverage, whereas the premium paying term (PPT) is the short tenure you have to pay premiums for, after that, coverage continues without any further payments. Knowing the difference helps you choose the best combination for your income, bills, and goals for the future. Let's go over this in more detail.

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What is the Difference Between Policy Term and Premium Paying Term?

The policy term is the total duration for which your term insurance coverage remains active, while the premium payment term is when you must pay premiums to keep the plan active.

The premium-paying term can be equal to or less than the policy term. If premiums are not duly paid according to the chosen premium-paying term and frequency, coverage shall cease before the end of the policy term.

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What is the Policy Term?

Life insurance policies cover your life only for a specific period of time, except for whole life insurance plans. You can choose to remain covered for 5 years, 10 years, 20 years, and so on. This period is called the policy term. It is an important concept in term insurance because such policies only cover deaths that occur during the policy term and not after. No benefit shall be paid to the nominees of a term cover after the end of the policy term.

Endowment plans on the other hand offer maturity benefit to the policyholders should they survive the policy term.

In order to keep the policy active and the life cover in force throughout this period, you are required to pay premiums. This brings us to the premium payment term.

Note: Know more about what is term life insurance first and then buy a term plan for your loved ones.

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What is the Premium Paying Term?

Now, premiums are what you pay to keep the policy in force. The premium paying term meaning is the period during which due premiums have to be paid. There are two variants to choose from:

Regular Premium Paying Term - If it is equal to the policy term, premiums are to be paid for the entire policy duration. This is known as regular premium payment. For example, if the policy term is 20 years, premiums will have to be paid for the whole 20 years.
Limited Premium Paying Term - The other option is when the premium paying term is less than the policy term. In such cases, you pay premiums for a limited period, but the life cover continues till the end of the policy term. For example, you can choose a policy term of 20 years but will have to pay the premiums only for the first 10 policy years.

The frequency of premium payment in both cases can be monthly, quarterly, half-yearly, or yearly.

There is also a third variant viz. single premium payment which requires you to pay a lump sum premium amount for the entire period of coverage.

Note: It is suggested to calculate the term plan premium on the term policy calculator online tool by Policybazaar before buying.

How to Choose the Right Policy Term and Premium Paying Term?

Before choosing the right policy term and premium paying term, you need to understand the premium paying term and policy term meaning. You need to select the right mix of policy and premium paying terms based on your financial stage. If you are young and just starting in your career, buying an extended policy term with a regular premium payment mode makes sure steady payments are paid over years. If you make a lot of money now but think you'll make less in the future, a limited premium option might be better for you. You should always make sure that your policy term lasts until you retire. This way, your family will be financially safe even if you don't have a job anymore.

Key Points to Remember on Premium Paying Term vs Policy Term

Long Term Financial Cover: You need to check the policy term for which you need cover for, by understanding the debt repayment term, child’s financial independence, and any other financial goals that need to be covered.

Balance Premiums and Cover: After carefully reviewing the right policy term and suitable cover, you need to make sure that the premiums for the term plan fits within your budget, as you would need to pay these premiums for the premium paying term.

Life Stage Customisability: Several term life insurance plans allow you to choose from premium paying terms of regular, limited, or single modes. By selecting the one that suits your needs, you can make sure that the policy aligns with your needs.

Effect of PPT on Premiums: You need to understand that different premium payment terms will affect your total and regular premium amount. Shorter premium paying terms will have larger premiums that may be difficult to fit in your budget. Therefore, you should look for a premium payment term and modes that fit within your budget.

Wrapping It Up!

Remember to pick a longer policy term to ensure coverage for a longer time. If you are 20 years old and your policy term was for 20 years, you will only have protection till the age of 40. Buying a new plan at this age will incur higher premiums as the risk profile increases with age. Now that you have a good idea of the difference between policy term and premium paying term, you are in a good position to choose the best life insurance policy for yourself.

Note: You should also check the benefits of term insurance if you are planning to purchase the term insurance plan.

Note: Check out the best term life insurance in India and choose one that suits your requirements.

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FAQs

Q1. Can I increase the policy term once my life insurance plan has started?

Ans: No, you cannot increase the policy term after issuing the plan. That is why it is important to carefully choose a term that covers you until your retirement before buying.
Q2. What is the premium paying term meaning in simple words?

Ans: The premium paying term means when you need to pay premiums to keep your policy active. Once you complete this payment duration, the cover will continue for the rest of the policy term if you choose a limited premium option.
Q3. Which is better: regular premium or limited premium paying term?

Ans: It depends on your financial situation. A regular premium paying term works well if you prefer smaller, spread out payments over the entire policy term. A limited premium paying term is more suited if you want to finish paying early while getting covered for the longer policy term.
Q4. Should I get 20 year or 30 year term life insurance?

Ans: Yes, you should get a 20 year or 30 year term life insurance if your financial dependents will no longer be dependent on you anymore in the next 20 or 30 years.

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˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

Rs. 400/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 400/month (Rs.13/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 230 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 12/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 497/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 487/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 626/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 905/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,267/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. 447/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.679/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 910/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,924month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

Women

+Rs. 400/month is Starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.

1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

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