Why You Need Not Procrastinate Paying Your Insurance Premium

Written by : Knowledge Centre Team

2019-08-20

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Karan has had a term policy for the last three years. Amid busy work schedules, travel, and sundry other commitments, he never misses the deadline for the annual payment on his premium. In fact, Karan has a reminder set with his digital assistant for a week before the renewal date. Even if Karan is on the move, he uses his credit card on the insurance provider's website to pay his premium. It is quick, easy and secure.

Apart from the ease of transaction here, Karan is also making the most of the tools available and maximising benefits for himself. His insurance company offers him a small discount/rebate for online renewals which translates into immediate savings, while he gets a 40-day credit period from his credit card provider. He also gets loyalty points that he can either encash or redeem in exchange for other benefits offered by the credit card company.

Karan plays it smart, and you can too. With these five ways, paying your insurance premium has been made easier than ever before:

Insta Pay

You could use your bank's net banking platform or mobile app to pay your premium. Either medium takes only a couple of minutes. What is great about this is that insurance providers offer discounts/rebates on premiums paid through digital modes and you can also save a great deal of time this way.

ECS

You could set up a standing order with your bank through an Electronic Clearing System (ECS) so that the premium gets deducted automatically, saving you the hassle of remembering the premium dates and missing out on deadlines and incurring penalties.

Credit Cards

You could alternatively set up an auto-pay system if you use a credit card. The insurance premium goes through your card, and the amount reflects in the next billing cycle. It gives you some breathing space for making the actual payment, especially if the premium date is closer to the end of the month and you may be short of funds. Earn some loyalty points on the way, too, just like Karan. What's more, you can also convert your premiums into EMI on the company website/portal if you are using your credit card.

Digital Wallet

If you use e-wallets, do find out if any of them have a tie-up with your insurance provider. More often than not, e-wallets offer a cashback incentive for using their services. This translates into more savings for you!

UPI and QR Code

If time is vital, nothing is quicker than scanning the Unified Payment Interface (UPI) barcode or Bharat QR code generated by the insurance provider. Just scan the code from your banking app and the payment goes through in seconds.

Tips for staying on track with your premiums

Take time to read and understand the terms of coverage before you sign on the dotted line. Choose a plan that suits your needs and budget
Select the mode of premium payment carefully. Be sure to assess your finances and figure out which frequency of payment (monthly, quarterly, semi-annual or annual) would work best for you
Look to schedule your insurance needs early during the financial year. This makes it easier for tax planning and gaining deductible benefit under Section 80C
Set reminders via your smartphone/digital calendars to remind you, especially if you are opting for monthly or quarterly payment options. Also, this lets you ensure that there are adequate funds in the account if you are going for the ECS option

Recourse: If you miss a deadline

In case you end up missing a payment for whatever reason, the Insurance Regulatory and Development Authority (IRDA) has prescribed a uniform period of 30 grace days for quarterly, half-yearly and annual renewals, and 15 days for monthly renewals, within which the policy can be revived with no penalty.

If you miss the grace period or are unable to arrange for funds, you can still get your policy reinstated. You may be able to renew the insurance policy within 24 to 36 months since the time of the last unpaid premium by paying all the missed premiums as well as the interest.

In closing

Insurance is a commitment for the long-term. You need to nurture it just as you would any other investment. So, instead of opting for a policy and then being irregular with your premiums, look for a plan that offers a substantial life insurance cover at affordable premiums.

One such comprehensive and inexpensive term plan is iSelect that secures the financial freedom of your loved ones at the terms of your choice. You can get a cover for INR 1 Crore for as low as INR 365 per month.

The iSelect term plan offers comprehensive life coverage until the age of 80 and also insures you against terminal illnesses and accidental death and disability. It also provides you with the option of covering your spouse under the same policy. And if opted for at the start of the policy, you can also increase your life cover just as your responsibilities do.

With eight digital modes of payment, you can have one of the most flexible and inexpensive insurance options right at your fingertips.

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