Every life insurance contract requires the policyholder to make a single or periodic payment called 'premium'. The kind of policy selected by an individual will determine the payment options available, while premium amounts differ from plan to plan based on the proposer's age, sum assured and policy terms.
Most people are unaware of the fact that discounts are offered on premium payments. The mode of payment and the sum assured are two factors that can help you attain a discount on the premium rate applicable to your life insurance policy. Rebates, as they are known in insurance jargon, are usually offered by most insurers for a sum assured that is higher than a particular limit. The reason for this discount is that the Servicing Cost Per Unit of Sum Assured becomes lower for a policy that is taken out for a higher sum assured, while other similar policies with lower sum assured essentially translate to a higher Servicing Cost Per Unit of Sum Assured.
Rebates are also offered for the mode of premium payment. While the rebate is already incorporated into the premium rate in case of limited and single premium policies, plans with an annual premium payment mode can help in attaining rebates as the Servicing Cost for monthly, quarterly or semi-annual premium policies is relatively higher for the insurer after taking into consideration administrative, collection and processing fees. A single premium payment per year will mean that the insurer will have to incur lower servicing costs, thereby affording you a part of the benefit.
Individuals who fail to make their premium payments on time, or cease making premium payments towards a policy after a period of time, shall not be eligible for its benefits. However, a good number of life insurance policies come with a 'grace period' that usually spans up to 30 days. Policyholders must make their due premium payments within this period, or else the policy will be considered as lapsed. Lapsed policies can be revived by paying the overdue premiums along with the interest rate applicable and other charges, if any, but the final decision regarding the revival of a lapsed policy lies with the insurer, who will carry out the necessary verification to confirm that the customer is in a healthy financial position so as to avoid future defaults on premium payments.
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
Copyright © 2025 BankBazaar.com.