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Understanding Term Insurance With Limited Pay

Updated On Oct 12, 2021

A financial product's success is largely determined by the level of personalization it allows. The reason for this is that policy seekers come from a variety of financial backgrounds based on their salary, employment, and financial obligations. A term plan can also be customised to meet your specific needs. Insurers have become fierce competitors in this field. You can pick a plan that meets your needs in terms of the sum assured, policy length, and premium payment flexibility. The following article focuses on term insurance plans with limited pay. 

What are Term Insurance Plans With Limited Pay?

Limited term insurance plans allow you to pay insurance premiums for a set period of time while also ensuring that your coverage is extended for a longer amount of time. It provides you the benefits of low premiums and continuous coverage. For example, if you purchase limited term insurance for a period of 25 years with a premium payable for only ten years, you will be required to pay the premium for ten years while your premiums are covered for a period of 25 years.

What Are The Benefits Of A Term Plan With Limited Pay?

By limiting the payment load to a shorter length, term insurance with limited pay allows you to obtain a longer life coverage. Here are a few of the plan's advantages.

1. Shorter Premium Payment Period

For a longer policy term and life coverage, you get a shorter premium payment period. You can choose the payment period as long as you are in your employment phase if you plan properly depending on your revenue. You can, however, extend the policy term during your retirement without having to pay for it. It's a well-thought-out, predetermined long-term strategy for all of your financial demands. Even though you are obligated to pay within the restricted time period, you will benefit from the entire plan's advantages. Furthermore, while the burden is focused for a set period of time, the duration is determined and personalised by you.

2. Reduced Risk of a Policy Termination

It's usual to buy a life insurance policy without doing your homework and then fail to pay the premiums on time to ensure that the benefits are paid out due to unforeseen financial obligations. Due to the short payment term of a limited pay term plan, you can lessen the risks of such inconsistencies in receiving product benefits.

3. Increased Tax Benefits

When you get a term insurance policy with a short payment period, the annual premium will automatically rise. The premium fee is more than the usual pay option. The amount of tax deduction under Section 80C of the Income Tax Act can be increased as the premium amount rises each year, up to Rs 1.5 lakhs per year. You can check and compute the other savings and investment possibilities chosen to comply with the regulations while filing such a claim.

4. Plan For A Big Sum Assured

If you buy a term plan early, the premium will be lower because of the lower risk of mortality when you are young. Also, because your financial commitments are smaller at this age, you can put more money into a term plan. You can buy the house and make all of the necessary payments before getting married, allowing you to save for other long-term financial goals. It enables you to easily ensure a high sum assured by creating a detailed financial plan that includes suitable insurance, investments, and savings choices for the rest of your life.


In the face of unforeseen life circumstances, term insurance plans have become a must-have. To secure your family's financial needs, you must plan ahead of time for the purchase. You do, however, have the power to select the product that best suits your needs. One such option is the limited pay term plan. Even if you have a short payment term, you can still enjoy all of the insurance benefits for the duration of the policy. You should choose the finest insurer with a reasonable claim settlement ratio for term insurance. With the limited pay term plan, you can get a longer risk coverage while just paying for a short time. 

You may also like to read - Does It Make Sense for You to Buy a Joint Term Life Cover with Your Spouse?

Monthly Vs Lump-Sum Pay-Out In Term Insurance

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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