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Premium Payment Modes Available Under A Life Insurance Policy

Updated On Sep 10, 2021

The most frequently asked insurance-related questions are often not about who should buy life insurance, but rather which life insurance to buy and how to pay for it. The answer to the question of which life insurance to buy varies from individual to individual. However, the most accessible, convenient and economical life insurance option in the market for most families is that of term life Insurance.

This leads us to the next point of how one should make premium payments for said life insurance. This, too, varies from person to person and depends largely on factors such as the access to funds, affordability and convenience of the policyholder.

Different Premium Modes Of Payment 

To explore this in detail, let us take a look at the various payment options in term life Insurance as well as their unique advantages:

1. Regular Premium Payment

This is the most common and preferred mode of premium payment used by most policyholders. With regular mode, the premium payments for your term life Insurance are made on a periodic basis, at a regular frequency. The premiums for the policy could be paid yearly, monthly, quarterly, or half yearly based on the individual preference of the policyholder. Regular premium payments are popular since they result in the premiums becoming quite affordable. As the process of premium payments is stretched over a long period of time, it avoids placing a heavy, one-time financial strain on the policyholder. It also offers immense flexibility to the life insurance policyholder. This is because if at any time, the policyholder wishes to discontinue the policy due to change in circumstances or reduced liabilities, he or she can do so.

2. Single Premium Payment

This is one of the less frequently chosen modes of premium payment for life insurance policies. With single premium payments, the policyholder is required to make a one-time complete, upfront payment of premiums, regardless of the duration of his policy. It might be tempting to believe that a one-time premium payment might prove to be cheaper in the long run. However, financial advisors say that when factored for inflation, single premium payments can often cost policyholders much more than other payment modes. An advantage of the single premium payment mode, however, is that there will be no non-payment of premiums and that the policy will never lapse. However, most people do not have the means to make a large upfront payment such as required in this case. Hence, people who should buy life insurance with single premium payment are those who can afford the one-time financial burden and want to protect themselves against a policy lapse.

3. Limited Premium Payment

Another option of premium payment for your life insurance is the limited premium payment mode. With this option, policyholders can pay the premium for their entire policy in a limited period of time, such as 5 or 10 years. The premiums payments are therefore taken care of within a short time period while the insurance benefits for the same can continue for a long time. The downside of limited premium payments is that the premium amounts for this mode are generally higher than regular payments. However, it does have a few key advantages. It is an ideal payment option for those who do not wish to keep paying premiums over a long stretch of time. It is also a preferred option for those who wish to retire before the term of the life insurance policy ends. By paying off their premiums beforehand, they can reduce the financial burden of premiums from their post-retirement lives.


At the end of the day, who should buy life insurance at which premium payment mode depends on the person’s finances, considerations and individual preferences. Whatever the frequency of premium payment be, you should make sure that your term life Insurance is versatile, efficient and reliable.

Also read - Term Insurance Plan for All Age Groups

5 Year Term Insurance Plan in India

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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