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The Long Read
Everything you *need to know* is right above this. Scroll down, only if you'd still like to read more (honestly, why?)
Good news! Yes you can change your premium payment frequency after buying a term insurance plan.
There are four different term insurance premium payment frequencies. They are:
Monthly - you pay the premium every month
Quarterly - you pay the premium every 3 months
Half-yearly - you pay the premium every 6 months
Yearly - you pay the premium amount every year
You can choose a premium payment frequency based on your convenience.
There is no direct answer to this. It all depends on:
Which premium payment frequency you are comfortable with
Your financial means
Your ability to pay your premiums on time so that your policy does not lapse
For example, if you are a salaried employee who has just started their career, you may find it difficult to pay large amounts as premiums on a yearly basis. In that case, you may want to opt for a monthly premium payment option, which is lighter on your pocket.
If you are someone who wants to pay premiums only once a year and forget about paying premiums until the next year, you may like to opt for an annual premium payment frequency option.
You can change your premium payment frequency to any of the four options (monthly, annually, half-yearly, quarterly) only on any policy anniversary i.e. the date when your policy completes a year.
Your 1st policy anniversary is that date when your term insurance policy completes 1 year. Your 2nd policy anniversary is the day when it completes 2 years and so on.
So you can change your policy’s premium payment frequency only on a policy anniversary.
You can change your premium payment frequency by submitting a request on your insurer’s website or by visiting their branch. Depending on your insurer, you may be able to complete this process online.
Yes, you can, but only on your policy anniversary.
For example, if a large amount paid annually is not an issue for you but you struggle to keep track of monthly payments, you may want to switch to an annual premium payment frequency.
You can change your premium payment frequency to any of the four options (monthly, annually, half-yearly, quarterly).
But again, this depends on your policy features and is also subject to whether your insurer allows it or not. You need to speak to them and confirm if you can change your premium payment frequency in any way you want.
Insurers don’t charge you for changing the premium payment frequency. However, it is always wiser to check with them before you make the change.
Not necessarily. Depending on your insurer and your term plan, you can do it online by visiting the insurer’s website or offline.
It’s best to check with your insurer what modes they allow for changing the premium payment frequency of your term plan.
Yes, you can change your premium payment frequency as many times as you want.
Simple. Choose your premium payment frequency as per your convenience to pay your premiums. Let’s look at the four different options and understand how to pick the best one for your needs:
Monthly - You pay the premiums every month. Choose this if you find it easy on your pocket to pay a small amount every month for your premium. If you’re at the beginning of your career or have a fixed monthly budget, you can consider this.
Quarterly - You pay the premiums once every 3 months. Choose this if you find it difficult to keep track of monthly payments but find the amount for half-yearly and annual payments not so pocket friendly for you.
Half-yearly - You pay the premiums every 6 months. You can choose this if you find it a hassle to pay premiums monthly or quarterly but you don’t want to pay a big amount as yearly premium.
Yearly - You pay the premiums every year. You can choose this if you want to clear your yearly premium payment in one shot without going into the hassle of monthly/quarterly/half-yearly payments and you don’t mind shelling out a large amount annually towards the payment.
If you’re the cost-conscious type, here’s another tip that can help you make up your mind:
Annual and half-yearly payments can help you save ~5% and ~2%.
So if you don’t mind paying a comparatively large amount at one go towards your premium payment, you can opt for annual or half-yearly premium payment frequencies and enjoy some savings. Additionally, you can also enable autopay from your bank account to ensure that you don’t miss out on premium payments.
Since you have a fixed monthly budget, you should choose the monthly premium payment frequency option. Choosing this option will be light on your wallet without exceeding your monthly budget.
But remember, there is a downside to choosing the monthly premium payment frequency - you can miss or forget to pay your premium on time resulting in a policy lapse.
You need to remember the monthly premium payment date and pay the amount on time. An easier way to ensure this is to enable auto-pay on your bank account or credit card to avoid missing premium payments on time.
If you do not pay your premiums on time, your term policy will lapse. You will lose all the premiums you have paid so far and worse, all the policy benefits too. This means, if something happens to you unexpectedly, your family will not be able to claim your life cover and will essentially face a financial crisis. You can enable autopay with your bank to ensure that your premiums are getting paid on time.
So, ensure that you pay your premiums on time. Find out in detail about what happens when you do not pay your term insurance premiums on time.
No, it will not. See, a term policy is like a promise or a contract. Your premium amount will never change unless you change any feature/benefit of the policy (increase your life cover, add riders etc.).
No. Changing your premium payment frequency will not impact the payout that your family may receive in any way.
Simple, you can still choose the following premium payment frequencies:
But be prepared to be able to afford a higher outflow every time you make a premium payment.
Great question. If you’re a freelancer, chances are your income may not come monthly but it may come in chunks or you only receive your payment when a project completes. So, you can pay off your entire premium at one go by choosing the single pay premium payment term. You can do so when you get a significant payout, such as fees from some of your projects. As a result, you need not worry about choosing any premium payment frequency.
But in case, you want to opt for regular pay, you can choose the annual premium payment frequency. While you may not have a regular monthly, quarterly or half-yearly income to pay for your premiums, you’re likely to have an annual income, i.e. get paid at least once a year. So choosing the annual frequency will allow you to pay for your premiums easily.
As an entrepreneur, you’re more likely to retire a little later than salaried employees. So it’s best if you go for a long duration premium payment by opting for a regular pay premium payment term. That way, you can also get the flexibility to change your policy benefits in the future should the need arise.
Keeping that in mind, you can opt for a premium payment frequency that is convenient for you.
If you are a new entrepreneur with limited income, you can go for monthly payments as it is light on your wallet.
If you can afford a higher outflow, you can pick the half-yearly or even annual payment options (and enjoy some savings while at it!)
You can strongly consider the annual premium payment frequency. As an entrepreneur you may incur a lot of ongoing or sudden expenses throughout the year, which may make paying premiums monthly, quarterly or even half-yearly a little difficult because you may not want to spend money at those points. But you’re likely to achieve your annual financial targets and accumulate enough wealth to be able to pay your premiums annually. A high outflow shouldn’t pinch your pocket then.
Yes, it does.
You’d only be able to change your premium payment frequency if you have opted for either the limited pay option or the regular pay option.
If you have opted for a single pay premium payment term, you won’t be able to make changes to any premium payment frequency because you pay all the premiums of your policy in one go.