SEBI registration no. : ARN-113510
Expiry : 3rd AUG 2025
IRDA license no. : IMF186644360120180192
Expiry : 24th JAN 2027
Latest articles on Life Insurance, Non-life Insurance, Mutual Funds, Bonds, Small Saving Schemes and Personal Finance to help you make well-informed money decisions.
Are you in the process of finalising investments in insurance policies ?If yes, then before you submit the form, check the frequency of paying premiums — monthly, quarterly, yearly — that you would like to opt for. A small difference, such as paying the premium annually or monthly can have an impact on the amount you pay.The charges you pay towards policy administration too differ with the frequency.
For instance, you would pay Rs 11,718 for Jeevan Anand Policy offered by the Life Insurance Corporation, if you choose yearly payment of premium. However, the monthly premium would not necessarily be (Rs 11,718 / 12), which is Rs 976. The monthly premium is a bit higher at Rs 1,057. Looks like a small difference, but over the year it makes a difference of about Rs 1,000 in the yearly premium. In effect, you are paying 8.24% higher by opting to pay monthly and not yearly.
Similarly, under the Birla SunLife Insurance Term Plan, one pays 4% higher if he opts for the monthly mode of premium payment vis-à-vis the yearly mode.
Not just the premium, the additional charges too differ in some cases. The recently launched Health Saver Plan by ICICI Prudential Life Insurance asks for a higher policy administration charge when a policyholder takes the monthly mode.
The product brochure states: "The policy administration charge is Rs 60 per month where the premium payment frequency is yearly or half-yearly and Rs 90 per month for monthly frequency."In some policies, opting for an electronic clearance service (ECS) or direct electronic payment of premium will help the policyholder in case of a monthly option. The insurance company adds additional charges if ECS is not opted for in monthly payments. This is because, for premium paid via ECS, the insurance company doesn't incur additional processing fee every time the premium is paid.
Better still, it saves you the burden of checking when the due date is, calling the insurance agent every month to collect cheques and ensuring that the agent has actually deposited the cheque. So, the next time an insurance agent comes asking for the premium rates of various modes of payment, check whether there is a way to reduce your total premium by simply changing the mode.
SEBI registration no. : ARN-113510
Expiry : 3rd AUG 2025
IRDA license no. : IMF186644360120180192
Expiry : 24th JAN 2024
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