Sheer flexibility is one of the major reasons behind the popularity of term insurance. Apart from the policy tenure and premium payment frequency, the insurer allows you to choose a premium paying term at your convenience. This ensures that your term insurance premium payments come differently than your life goals.

Keep scrolling for a detailed overview!

To purchase a term insurance plan and get life coverage throughout the policy tenure, you must pay the insurer a premium. The duration for which you pay the premium is called the premium paying term.

It can be equal to or lower than the policy term (the term plan), enabling you to plan your premium payments based on your financial capacity and life goals. The available durations in this regard can vary depending on the type of insurance policy, selected plan, and the insurer.

You must choose an appropriate premium paying term to make timely payments. Here’s why:

• A lower premium paying term allows you to pay premiums for a specific duration, offering financial freedom during the later years of the policy term. However, it significantly increases the premium amount.
• In case of a premium paying term that is longer or equal to the policy term, you must make payments for a longer duration. However, the premium amounts become lower, making insurance more affordable.  

Remember, the term insurance premium directly relates to the coverage provided by the policy. Thus, you must choose a premium paying term that allows you to make timely payments and gain continuous coverage from your policy.   

1. Regular Premium Paying Term

Under this mode, you need to make premium payments at regular intervals—annually, half-yearly, quarterly, or monthly. It is a standard way for most individuals to purchase term insurance and ensures continuous coverage if the premiums are timely paid.

The regular premium paying term is excellent for salaried individuals or people who wish to divide their premium payments equally across the policy tenure.

2. Single Premium Paying Term

A single premium paying term lets you make a lump sum payment when purchasing the policy. It allows you to get coverage for the entire policy duration, removing the hassles of timely premium payments.

This option suits individuals with surplus funds or a high annual income.

3. Limited Premium Paying Term

As the name suggests, this mode allows you to make premium payments for a shorter duration than the policy term. It enables you to finish making premium payments within a specific period and enjoy coverage for the remainder of the policy tenure.

It is recommended for people who aim to finish their premium payments early to free up funds for other life goals.

4. Flexible Premium Paying Term

It enables you to customise the premium paying term as per your financial capacity and preferences. The insurer allows you to select the premium payment schedule (annually, half-yearly, quarterly, or monthly) and the premium amount (within specific limits).

Flexible premium paying terms are highly suggested for people with fluctuating incomes.

Age of the Policyholder

The policyholder’s age is one of the most crucial factors when determining the appropriate premium paying term. For young applicants, a longer premium payment term can be suitable as they get lower rates and can spread the payments in affordable instalments throughout the policy term.

Meanwhile, older applicants can opt for a shorter payment term, choosing a duration based on their remaining working years and enjoying coverage for the remainder of the policy period.

Income of the Policyholder

Duration of the Policy

For individuals seeking life coverage until a certain date, like retirement or until their dependents become self-sufficient, a regular premium-paying term that matches the policy duration can be ideal.

However, if the policyholder is seeking life coverage for a longer duration, choosing a limited payment term can be more beneficial.

Premium Amount

Total Cost of Premiums

Spending Capacity

Payment Consistency

Calculating the premium amount before buying a policy is an ideal way to determine the right premium-paying term. You need to assess how much coverage you need, the policy tenure, add-ons, your pre-existing medical conditions, age, and lifestyle habits.

Then, you must visit an online term insurance calculator and enter all the relevant details. The platform will show you the estimated premium amount, enabling you to choose the correct premium paying term.