Premium payment towards life insurance policies is an important factor that governs the purchasing decision. The premium that is required to be paid should fit into your budget in a way so that you can continue your payments and keep your policy active for the long run. The term insurance plans are more pocket–friendly and economical than the other life insurance policies.Read more
*Tax benefit is subject to changes in tax laws. *Standard T&C Apply
** Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines
However, the premium payment mode directly contributes to the cost-effectiveness of a term plan to a large extent. In case of any unfortunate event, your family might lack financial stability and protection against various expenses. In such situations, the premium payment options can provide safety to your family.
Limited Pay Term is an autonomy that is provided to the life assured where he/she pays a premium amount for a specific pre - determined tenure. It also allows the policyholder to select a definite period such as 5, 10, 15, or more than that for paying premiums. However, the assured receives full life coverage for the complete policy tenure, regardless of the period of premium payment. After the expiry date of the precise payment terms, the policyholder is not liable to pay any due payment to the insurer. The premium payment term is less than the entire policy term, thus increasing the flexibility of the insurance companies.
In Limited Pay till 10 life insurance, policyholders pay a premium in the first 10 years of ownership, but the benefits last for life. For example – Shilpa, 40 years of age purchases a term insurance cover for 20 years, with a limited payment option. She is expecting to get retire at 55 years of age and wishes to pay off all the premium dues in 10 years right from now. In such situations, Shilpa will be responsible for paying premiums only till the age of 50. After this, Shilpa is not required to pay anything. However, the plan coverage will continue for about 20 years.
This limited pay till 10 option is majorly beneficial for those who have a changing monetary condition, flexible salary/income, changeable working surroundings, and/or are near to the retirement age.
While purchasing an insurance plan, the mode of premium payment is one of the important factors that should be taken into consideration. Generally, there are two ways to pay premiums i.e. limited and regular. The selection of premium payment options depends on various aspects such as current financial condition, current liabilities, future income, and retirement plans. Before making a final selection between regular and limited premium payment options, it is very important to understand the terms and conditions of both. A limited pay term till 10 years is flexible and customizable. Following are some of the benefits:
Premium payments end in a very short period – One of the main benefits of limited pay till 10 is that it releases you from paying premium prices for your term plan for a longer tenure. A policyholder is required to pay a premium for a limited period. This simply means that you can pay all your premiums within your work-life before your retirement.
Decreases the lapsing of the policy – The limited pay till 10 years should be payable for a specified period, so you are not required to pay premiums prices on time for a longer tenure. You can pay a premium early and the chances of policy lapse reduce.
Tax benefits - Get the tax benefits on premiums paid under section 80C of the Income Tax Act, 1961. In this section, deductions up to Rs. 1.5 lakh is allowed from gross total income.
Planning for a high sum assured amount – If you are planning to buy a term plan at an early age, the premium prices will be comparatively lower due to the decreased chances of death risk when you are younger. By buying this plan early, you can complete all the required payments before your marriage and then you can think of other financial objectives.
Always select the limited pay till 10 plans if you are not sure about paying premiums for a longer tenure in your future. This particular option is suitable for the following individuals,
In all the above such situations, you can pay all your premiums during your daily going active life.
Majorly, all insurers’ providers charge a high premium price with increasing age. Thus, for individuals who buy plans and keep paying the premium prices for the complete term or for those people who purchased at a later stage of life, the premium increases with age. In case, when it is purchased at later ages, the impact is quite more stressed.
In the case of a limited payment term, the plan offers comprehensive coverage even though the premium is paid for a limited period. This aids in evading the increased costs in the long run and helps save a considerable amount.
Nowadays, term insurance plans have become a necessity regarding unpredictable life events. You should always plan to buy early to secure the financial requirements of the family. However, these plans provide you the liberty to select the insurance product based on your convenience. The limited pay term till 10 years is one of the best options. Even with a limited payment tenure, you have the leverage to receive all the benefits ensured at the time of the policy term. This allows you to enjoy the longer coverage by paying for a short duration.
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