Premium paying term is the total period (number of years or months) for which a policyholder has to pay premium, for a life policy. Policy term is the period within which a policy remains active and offers protection/benefits. Normally, the time period of premium payment and policy terms are equal, but some life insurers, including ICICI Pru, HDFC Life and Max Life, offer the policyholder the autonomy of selecting the premium paying term (usually lower than policy term). For instance, the policy term for a life insurance plan can be 40 years, but premium can be paid for 20 years.

One of the advantages of limited premium payment is that you, as a policyholder, can pay off your premium within active working days of your life, while your cover runs for a longer period. For instance, ICICI Pru’s iProtect Smart policy offers limited premium payment for 5, 7 and 10 years for a maximum policy term of 85 years (less age at entry).

Published on March 3, 2020