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What if I miss a term insurance payment?
Most people purchase term plans to safeguard their family’s financial future. Term policies offer life cover for a specific time. If anything happens to the policyholder during the policy term, their nominee receives the sum assured payout. Term plans do not offer any maturity or investment benefits. Since they’re pure insurance policies, they are quite affordable. Most people opt for term plans instead of other life insurance products for this reason.
1 Crore Term Insurance@Rs.21/day***
To delay is to regret
You may not always be around to take care of your family. And that’s when a term plan ensures your family is well protected.
:1800-266-9777
What Happens When a Term Insurance Premium Is Not Paid?
Table of Content
What Is Term Insurance Premium?
Since term life insurance plan are insurance products, policyholders need to pay a premium at regular intervals to keep their policy active. So, your term plan premium is the amount you pay at regular intervals to keep your policy going. As the policyholder, you can choose how often you want to pay your premium. Some people make payments monthly, quarterly, every six months or once a year.
What Happens If I Miss a Term Plan Premium Payment?
Once you purchase a term plan, you should pay your premiums on time. But, some individuals may opt to stop paying mid-way through the policy term. If this happens, the insurer will not take any legal action against you. So, your term insurance premium payment is not like a mandatory credit card payment or bank loan EMI. If you miss a payment, your policy ends.
If you missed paying the term plan premium by accident, do not worry. Every term plan comes with something known as a grace period. This is a period of time during which you can make your premium payment even after the due date. Let’s say you pay annual premiums for your term plan. Every year, your premium is due on 1st August and your term plan has a grace period of 30 days. If you do not pay the term insurance premium before 1st August, you have until 30th August to pay. If you make the payment within the grace period, your policy will continue as normal.
Things to Keep in Mind While Buying Term Insurance
Before you purchase your term plan, there are a few things you need to consider:
The Cover Amount
Understanding how much cover you need is the most crucial step. Your decision will depend on your age, current finances, lifestyle and future financial responsibilities. Younger individuals can opt for higher sum assured amounts without worrying about high term insurance premiums. Ideally, you should pick a sum assured amount at least 20 times your current income if you’re between 25 and 35. If you’re between 36 and 45, you can opt for a sum assured amount that is just 15 times your annual salary. If you’re above the age of 46, you can pick a sum assured amount that is 10 times your annual income. Remember to consider the rate of inflation and other financial liabilities like loan payments as well.
The Policy Term
Your age should determine the policy term. When you’re younger, you can opt for a longer term. The idea is that the term plan should provide you with life cover at least until you decide to retire. So, individuals in their 20s should pick plans that offer a term of 40 or more years. Conversely, an individual in their 50s can opt for a policy term of just 10 or 15 years.
Pick Your Payout
Term plans now allow policyholders to pick how they would like their nominee to receive the payout. Most insurers will make a single lump-sum payout. But, if your family has long-term financial liabilities, you can opt for your nominee to receive the payout in monthly or annual instalments.
Find the Ideal Insurer
Picking the ideal insurance provider for your needs can seem daunting. But, there are some vital factors you need to check. Firstly, make sure the insurance provider offers the kind of coverage and payout option you’re looking for. If you’re looking for particular riders, ensure the insurance provider offers what you need. Next, check the insurance provider’s claim settlement ratio. The figure lets you know how likely your nominee is to receive the payout after raising a valid claim. Finally, look at the insurance provider’s market reputation. Check the number of valid customer complaints and their grievance ratio. Once you’re happy, you can go ahead and pay your term plan premium.
When it comes to paying your term insurance premium, it’s always a good idea to make your payments before the due date. In case you forget, you can make the payment within the grace period to keep your policy active. If you can, set up an auto-debit with your bank account to ensure you never miss a term plan premium payment.
Related Articles
- What Does Grace Period Mean in Term Insurance?
- What Will Happen When a Term Life Insurance Policy Matures?
- What Happens If You Outlive Your Term Life Insurance Policy?
- Should I Surrender My Term Policy?
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
Written By:
Vishal Subharwal
Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.
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Here's all you should know about ULIP insurance.
We help you to make informed insurance decisions for a lifetime.
HDFC Life
Reviewed by Life Insurance Experts
HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER
We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.
^ Available under Life & Life Plus plan options
#Provided we have received all the relevant and required documents and no further investigation is required. Claim settlement process would be completed within stipulated timelines once the claim request is approved
##Individual claim settlement ratio by number of policies as per audited annual statistics for FY 23-24
***Online Premium for Life Option for HDFC Life Click 2 Protect Super (UIN: 101N145V07), Male Life Assured, Non-Smoker, 20 years of age, Policy term of 25 years, Regular pay, Annual frequency, exclusive of taxes and levies as applicable. (Monthly Premium of 622/30=20.7).
**7% online discount available on 1st year premium only
@As per integrated annual report FY23-24, available on www.hdfclife.com. As of May 2024
~Tax benefits of ₹ 54,600 (₹ 46,800 u/s 80C & ₹ 7,800 u/s 80D) is calculated at highest tax slab rate of 30% on life insurance premium u/s 80C of ₹ 1,50,000 and health premium (Critical illness rider) u/s 80D of ₹ 25,000. Tax benefits are subject to conditions under section 80C, 80D, 10(10D) as per Income Tax Act, 1961. Please consult your tax advisor for more information.
ARN - ED/10/23/5711
