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Premium payment is one of the crucial parameters that govern the decision of buying insurance policies. It is required to fit into your budget so that the policyholder continues it for the long term and the policy remains active. In comparison to other life insurance services and products, term insurance is way more economical and pocket-friendly. However, the premium payment mode is a contributing factor to its cost-effectiveness. Let’s understand the premium payment options that suit your requirements.
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Both term insurance, regular pay vs limited pay, have their pros and cons. Before choosing the right premium payment tenure, you should take a look at the following term insurance limited pay vs regular pay table, which can help you determine the most suitable term for paying the premiums.
| Parameters | Regular Pay Term Insurance | Limited Pay Term Insurance |
| Premium Payment Duration | The premiums are paid for the entire policy term, until the coverage ends. | The premium payment tenure is shorter than the policy term. |
| Coverage | The policy will cover the policyholder for the entire premium pay tenure, as long as the premiums are duly paid. | The coverage will continue for the entire policy term, but the premium pay term will end early. |
| Premium | Premiums, once decided at the time of policy purchase, remain the same for the entire premium pay term. | Premiums are slightly higher than regular premiums but remain constant for the entire tenure. |
| Financial Burden | Financial load distributed evenly across the complete policy term | Financial stress for a specific period |
| Payments | The premiums will continue even after retirement if the cover continues after your retirement age. | The premium payment will end after a specific period, and it does not extend after retirement. |
| Discounts | The premium discounts are applicable as per the insurer and existing offers. | In Limited Pay, you can save up to 59 percent premiums due to advance payments |
PPT or the Premium Payment Term is the total number of years, a policyholder is required to pay the premiums. It can be equivalent to less than the policy term. For example, if a policyholder buys a term life insurance for 20 years, then the premium payment term can be of 20 years or less. In this case, 20 years is the policy tenure for the term insurance plan.
Following are the premium payment options offered by term insurance policies:
Regular Pay: Where the premium payment term is equal to the policy term.
Limited Pay: Where the premium pay term is lower than the policy term.
Single Pay: Where only a one-time lump sum premium is paid for the entire tenure.
While buying an insurance policy, policyholders have to choose the right mode of paying premiums. Here’s a quick description of both the premium payment options.
Regular pay in term insurance is the most common premium pay option, where the premiums are paid for the entire policy term. In this option, the premiums per month are much lower than the premiums charged for the limited tenure, but in the end the policyholder ends up paying more in overall premiums, as the limited premium pay option charges up to 59% lower overall premiums.
Let’s understand with the help of an example:
For example, Sheetal, a 40 year old female, buys a regular pay term insurance for 30 year policy term. Now, Sheetal will pay have to make the regular premium payments for the entire policy tenure, to ensure continued coverage. If she suffers an untimely death during this 30 year policy term, the insurer will payout the sum assured to the nominee of the policy.
The limited pay term insurance allows customers to pay off the premiums for the entire policy term in a shorter tenure like 5, 10, or 15 years instead of the regular premium pay tenure of the entire policy term. The monthly premiums for a limited pay vs a regular pay may be slightly higher, but the overall premiums the customer pays in a limited tenure is usually much lower than the overall premiums in a regular premium pay term.
Let’s understand this with the help of an example:
Ridhi, 40 years old, works in an IT company and buys a 20 year term insurance for her family’s financial protection. She wants to retire at 50 years of age and hence, wishes to pay all her due premium in the next 10 years. She opts for the limited premium option while buying the policy and thus is only required to pay a premium for 10 years i.e., till 50 years of age. After which she is not required to pay any premium to the insurer but the coverage will continue for complete 20 year policy term.
The selection between limited pay vs regular pay: term insurance depends on your ability to pay and your life stage.
This Limited Pay option is suitable for individuals:
Who have short career spans such as sportsperson
Who works in unpredictable occupations such as the army
Self-employed or Business owners who don’t have a fixed income
Individuals who are near retirement age but need cover up to higher age
Regular pay is best suited for the following:
Individuals having fixed income might find the period payment easier.
This mode is also helpful if you are a salaried employee.
If you are young aged and looking for plan coverage till the age of your retirement.
Policyholders should always choose a plan after analysing the features and benefits of limited pay vs regular pay. Both have their advantages and disadvantages, but the selection of plans entirely depends on the suitability of the customer such as their future income, financial plan, etc. Nowadays, it is important to have a term insurance to protect your family against any financial challenges during critical times.
Note: Check all the best term insurance plan in India.
Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.
˜Top 5 plans based on annualized premium for bookings made on https://www.policybazaar.com in the first 6 months of FY 24-25.
Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
+Rs. 487/month (Rs.16/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 38 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
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale
Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.
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+Rs. 820/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 38 years of age.
+Rs. 1,443/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 38 years of age.
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