Have you ever wondered how much you can salvage by just choosing the right manner of coverage premium payment on your life insurance policy?

Most life coverage companies add an other cost to your insurance premium if you pay in episodes rather than in one single shot during the year. So, the insurance insurance premium under the yearly premium option in a policy would be less than those under semi-annual, quarterly or monthly options.

This is true for all life coverage policies other than unit of measurement linked coverage programs (ULIPs). All traditional coverage programs including term assurance, endowment, money back and whole life policies would bear down a higher insurance premium for the monthly manner and less for a annual mode.

Let us take the illustration of Life Insurance Corporation's gift plan, Jeevan Anand. The annual insurance premium for the policy for a certain age profile and policy term turns out to be Rs 5,461.

However, if the same individual opts for the semi-annual option, it is higher up at Rs 5,546 (Rs 2,773 x 2 payments in a year). As the frequence of payment cut downs from annual to monthly, the insurance premium be givens to increase.

Under the monthly mode, the policyholder would be paying 8.33% higher than what a annual insurance premium remunerator would pay for the same policy, even though he have opted for the same term and sum of money assured, and belongs to the same age group.

But, why do coverage companies make this derived function charge? It is not because the coverage company will gain an involvement on all the money that you have got paid at the start of the policy twelvemonth rather than in a little measure throughout the year.

Rahul Aggarwal, main executive director military officer of Optima Hazard Management Services explains, "Every clip the insurance company have premium, there is a banking cost and processing cost attached to it.

Hence, as the cyclicity of payment decreases, insurance premium additions slightly. Sum of three monthly payments is more than than than the quarterly payment; sum of money of two quarterly payments is more than the half-yearly payment; so on and so forth."

Moreover, coverage companies claim that they too can cut down costs involved in following up on clients who bury to pay their insurance premium on time. The frequence of phone calls would increase in lawsuit of quarterly and monthly premium.

Some of them also issue missive reminders on insurance insurance premium payment owed dates, which can be reduced if the premium paying frequence is yearly, rather than semi-annually, quarterly or monthly.

It have got also been establish that those who choose for the quarterly manner of coverage premium are more than prostrate to policy oversights than those who have a annual manner of payment, according to a interpreter of a private insurance company.

Chances of non-payment are less likely in the monthly manner as companies take a firm stand on electronic glade service (ECS). Some companies even penalise policyholders who take monthly manner of payment and make not choose for ECS, by levying other charges.

It also salvages you the hurting of asking your agent to come up place and accumulate the checks each calendar month or one-fourth and keeping path of the assorted owed days of the month in the full twelvemonth and whether the checks have got actually been debited toward insurance premium payment.

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