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Premium Holiday Feature or Premium Break Benefit is an important feature that offers flexibility to life assured to manage their premium payments in case of any financial restrictions. It is crucial to understand the T&Cs of this feature and its impact on the plan benefits before availing it. Let’s understand the premium holiday/premium break benefit in detail.
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Premium Holiday or Premium Break Benefit is an option available in certain term insurance plans in which the policyholder can take a break from paying his/her premiums while still enjoying all benefits of the term plan.
The Premium Break/Premium Holiday Benefit works differently depending on different insurance companies and policy terms. Some term plans allow policyholders to take a break from paying premiums for a specified number of months, while others offer a fixed number of premium holidays during the policy term. This benefit enhances the affordability and accessibility of term insurance, aligning with the Insurance Regulatory and Development Authority of India's goal of "insurance for all" by 2047.
*Note: Carefully read the term and conditions of your chosen term insurance plan and review all its features and benefits before buying it.
Term Plans
Here’s an example to understand how the Premium Holiday in Term Insurance works:
Consider Rakesh, a 30 year old man, who has a term insurance plan with a life cover of Rs. 1 Crore for a policy term of 30 years. He paid his premiums regularly for 5 years. But after that, he faced some financial tension due to which it became difficult for Rakesh to pay the premium due in the sixth year.
Therefore, he used the Premium Break Benefit (as granted by his term plan) to take a 6-month break from paying his premiums. During this time, Rakesh’s term insurance policy remains active, and his family will still receive the death benefit if any unfortunate event occurs.
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The premium holiday is an important benefit in term insurance due to these reasons:
Policy Continuity During Financial Hardships: One of the key advantages of the premium holiday benefit in term insurance is its ability to ensure policy continuity during financial hardships. The premium holiday rider allows policyholders to skip premium payment for a specified time period without their policy lapsing. This feature is particularly valuable during times of financial uncertainty, providing peace of mind that insurance protection will not be lost due to temporary financial setbacks.
Financial Flexibility: The premium holiday feature offers significant financial flexibility to policyholders. This means that policyholders can manage their finances more effectively during tough times, knowing they can catch up on premium payments later. This temporary relief can be crucial for individuals facing unexpected expenses or reduced income, helping them maintain their insurance coverage without additional financial strain.
Affordability and Accessibility: Affordability and accessibility are enhanced through the premium holiday benefit. By removing the fear of life insurance policy lapse due to missed payments, this benefit encourages more people to buy term plan. This broader accessibility supports the goal of widespread insurance coverage, making it feasible for more individuals to protect themselves and their families.
Regulatory Support: The inclusion of premium holiday benefit in term insurance aligns with the Insurance Regulatory and Development Authority of India's (IRDAI) mission to achieve "insurance for all" by 2047. This benefit, therefore, highlights the importance of making term insurance accessible and reliable for all segments of society.
Premium holiday in term insurance is a very useful and customer-friendly benefit that ensures policy continuity during financial hardships, thereby, enhancing the overall affordability and accessibility of insurance. Ultimately, this feature plays a key role in maintaining comprehensive financial protection for individuals and their families while letting you relax financially for a certain period of time.
†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
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