Life Insurance

6 Tips You Should Follow Before Paying Life Insurance Premium

life insurance premium

Having a life insurance plan is very important in today’s time. Well, the major concern for most of the people while buying the life insurance policy is premium amount and payment of premium. If you are also taking stress about the premium of life insurance policy offered by LIC of India then hang on. Nowadays as there are wide range of life insurance policies available in the market to cater the requirements of the insurance seekers.

 

Life Insurance Premiums

You can easily choose the most beneficial life insurance plan along with the most affordable premium rates to safeguard the future of your loved ones.

The best way to search for most suitable premium is with the help of premium calculator. Before we start with the things that are important to know while paying life insurance premium, let’s know first what is premium.

Premiums are the fixed periodic payment made to the insurance company in return of the lump sum payment offered by the insurer to the beneficiary at the time of demise of the insured person.

Also Read: You May Get Benefits of Paying your Premium at Financegab.com

Things to know about paying life insurance premium

Premium Should Be Paid in Advance

For LIC of India policies, it is important for the insurance buyer to pay the premium of the policy in advance. The insurers provide the choice to pay premium via cash or by cheque or Demand Draft. The upper limit of premium is set by the Insurance Regulatory and Development Authority is Rs50,000. Most of the policy offers 4 different option of premium payment i.e. monthly, quarterly, half-yearly and yearly.

Pay premium in advance

You can avail discount-

Based on the various factor like the mode of payment or sum assured the policy holder can avail discount on the premium amount. In case if your policy offers any rider benefit then you can avail it too by paying some extra amount along with the premium amount. Although, if you pay the whole premium at one go then the fund remains with the company for longer period of time and can earn higher returns.

Online Payment Option offers Rebate-

online servicing costs of monthly premium payment is low as compared to those which are paid offline. While you pay the premium amount online, you can save on commission which is you pay to the agent in case of offline payment of premium. Various different insurance providers’ offers rebate on online rate which are quoted. It has been observed that the rebate offered in the process of online premium payment is much higher to the rebate offered in the process of offline premium payment.

Tax Benefit on the Premium Payment

Almost all the life insurance policies offered by LIC of India  provides tax benefit on the premium paid under section 80C of Income Tax Act 1961. In case if you own more than one life insurance policy and you pay the premium for several policies then all the premiums can be included for tax exemption. This acts as a major benefit as the insurance holder can save bundle on their taxes with the help of tax deduction.

premium tax benefits

Grace Period

the life insurance policies offered by the LIC of India provide a grace period of 30 days within which the policy holder can pay the due premium amount in case he/she fails to pay the premium within the premium paying date. In case if you fail to pay the premium within the grace period then the benefits of the policy lapses. However, you can revive the policy benefits by renewing the policy.

The amount of Premium can fluctuate- based on the factors like age of the insurance buyer and the risk involved the premium amount of life insurance policy offered by LIC of India can increase or decrease. As the mortality rate increases, the insured will be required to pay higher premium. But in case of mortgage redemption policies the amount of premium of the policy decreases as the outstanding loan amount decreases.

In order to choose the most beneficial plan with most affordable premium rates, the premium calculator works as a great savior. With the help of premium calculator you can compare various plans online and choose the most beneficial according to your own suitability. So now when you have known all the important things about paying premium you can easily choose the plan that provides maximum protection to your loved ones.

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About Ajeet Sharma

My Name is Ajeet Sharma Financial Blogger & Founder of Financegab.com. We are a personal finance blog dedicated to personal finance & financial planners. The main aim of this blog is to help people to informed financial decisions.
View all posts by Ajeet Sharma →

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