Life Insurance costs depend on the type of policy and its terms. Your premium pays for the contract, but some policies also show separate deductions for cover, administration, fund management, or transactions. Check what is charged, when it is deducted, and how it affects your benefits before you buy or make changes.
Is a Life Insurance premium the same as a charge?
A premium is the amount you agree to pay for your policy. A charge is a specified cost within, or associated with, that policy. They are related but should not be treated as interchangeable labels. Your quotation and policy schedule should help you identify the amount payable and any separately disclosed deductions.
When reviewing a quote, ask for the base policy payment, optional cover cost, and final amount payable to be shown clearly. Also check the payment frequency and premium payment term. A monthly figure alone is not enough for a household budget. Write down the full annual outgo and when each instalment is due.
Do all types of Life Insurance have the same charges?
No. A pure risk Term Policy, a Non-Linked Savings Policy, and a Unit-Linked Insurance Policy have different structures. Do not apply a ULIP charge list to every Life Insurance contract. First identify the policy category, then use its own documents to understand costs, benefits, and the consequences of stopping payments.
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Policy category
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What to check
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Pure Risk Term Life Insurance
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Quoted premium, optional cover cost, payment terms and any disclosed servicing or revival amounts.
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Non-Linked Savings Insurance
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Premium commitment, contractual benefits and the surrender or paid-up provisions; avoid assuming a ULIP-style deduction schedule.
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Unit-Linked Life Insurance
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Separate charge schedule, units allocated and cancelled, NAV treatment, transaction rules and discontinuance provisions.
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A useful first question is: “Which section of my policy explains this cost?” Ask for a written answer that names the relevant clause. This makes it easier to compare the sales explanation with the issued contract and to revisit the explanation when reviewing a statement.
What do the main ULIP charges pay for?
ULIPs may disclose premium allocation, mortality, policy administration, and fund management charges, along with transaction or discontinuance charges. Not every product levies every category. Use the applicable charge schedule rather than assuming a fixed percentage or a standard number of free transactions. A nil charge in one category does not mean all charges are nil.
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Charge
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Meaning and usual treatment
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Premium allocation
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An applicable deduction before the net premium buys units.
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Mortality
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Cost of life cover. The calculation follows the contract and may use age and sum at risk.
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Policy administration
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Policy maintenance cost, where levied. Commonly recovered through unit cancellation.
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Fund management
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Fund-level cost reflected in NAV rather than a separate debit from your bank account.
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Switching or partial withdrawal
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A transaction charge, if specified, subject to the contract’s permitted transactions and allowances.
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Discontinuance
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A deduction that may apply when the linked policy is discontinued. Read the policy-year rules and payment restrictions.
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For each applicable row, record the rate or amount, calculation base, deduction frequency, and clause number. If a charge can change, ask what limits and approval conditions apply. Do not copy a charge from a different product or an older contract. Even a document hosted today may describe a legacy policy.
How do deductions appear in a policy statement?
A ULIP statement may show units purchased from the net premium and units cancelled for certain policy charges. Fund management costs are reflected in NAV. Read the statement together with the charge schedule. Looking only at bank payments or only at cancelled units can give an incomplete picture of the costs.
For a practical review, keep the opening statement, payment receipt, and closing statement together. Mark each new allocation, cancellation, and withdrawal, then ask customer service to explain any entry you cannot match. Avoid treating every change in fund value as a fee. Market movements also affect linked-policy values.
For further explanation, see Where does your ULIP premium go?
For unfamiliar statement terms, use ULIP terminology explained.
What should you check about optional riders?
Optional riders can add benefits and costs to your policy. Check the rider’s premium or charge, eligibility, exclusions, duration, and claim conditions in its own wording. A rider is not automatically included merely because it was discussed during a quotation. Ask for the final document to identify what you selected.
Before agreeing, write down the event the additional cover addresses and the benefit you would receive under its terms. Then check whether the rider cost is included in the quoted total. If the base policy and rider have different end dates, put both dates in your records so that you know when the additional protection ends.
What can stopping premiums or surrendering the policy cost?
Stopping payment, surrendering, and taking a partial withdrawal are different actions. Their effect depends on the policy type, duration, and provisions. Ask for a written calculation before acting. Check both the amount receivable and the resulting cover status. A low transaction charge does not by itself establish that early exit is suitable.
For ULIPs, the first five years are subject to the linked-policy liquidity restriction. A discontinuance request does not mean unrestricted immediate access to the money. Check the relevant discontinuance and payout provisions. For Non-Linked Policies, request the applicable surrender or paid-up calculation rather than estimating a refund from total premiums paid.
A clear service request can say: “Please show the amount payable if I surrender now, the deductions used and the date of payment. Please also explain what happens if I stop premiums without surrendering.” Keep the written response with the contract before choosing an option.
Does GST still apply to Individual Life Insurance premiums?
Individual Life Insurance Policies fall within the GST exemption effective from September 22, 2025, according to the Department of Financial Services. This should not be extended to Group Life Insurance. Its guidance states that Group Policies continue to attract 18% GST. Confirm the policy category and inspect the current invoice.
If an older quotation or prospectus mentions GST, ask for an updated payment breakdown. Historical wording is not a substitute for the tax treatment applicable to your payment. Transition and advance payment cases need the relevant rules checked. GST exemption also does not establish that policy benefits are exempt from income tax.
Which documents should you request before deciding?
Request the quotation, sales prospectus, policy wording, customer information sheet, and personalised benefit illustration where applicable. Read them as a set. Your objective is to connect each payment and deduction to a disclosed clause and understand the benefits after applicable charges, rather than relying on a headline premium alone.
Use a simple review sheet: What do I pay? Which charges apply? What is their calculation base? When are they deducted? What happens if I stop? Which exclusions affect cover? What values are contractual and what values are illustrative? Ask for answers in writing whenever the documents appear inconsistent.
How can ABSLI help you understand your policy charges?
For an Aditya Birla Sun Life Insurance policy, ask customer service for the charge schedule and an explanation tied to your policy number and product version. Request a current illustration or servicing calculation where relevant. Product terms differ, so a generic article cannot establish the exact charge payable under your contract.
October 6, 2026
5 mins 
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