Regular Premium

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Definition:

A regular premium is a payment made at particular time intervals/ frequencies for insurance coverage. The regular premium can be paid in instalments such as monthly, quarterly, semi-annually, or annually as per the convenience of the policyholder.

Description:

A life insurance policy covers the life of the life insured and takes care of the nominees financially in case of the life insured’s death in the policy term. It seeks money in terms of regular premium payments to be in force throughout the policy years. In simple words, the regular premium is the fuel on which the life insurance policy runs.

People who own a life insurance policy often tend to schedule regular premium payments. In life insurance, buyers have the possibility to choose their payment on a monthly, quarterly, half-yearly or yearly basis. And, to receive the benefit of the policy till the end of the policy duration, that premium is paid subsequently every year on the same date. This is called regular premium payment.

Insured can choose to pay regular premiums based on their financial status. Under the regular premium payment, the premium payment amount is more over time than that paid in the single premium policy.

Example:

Anuj purchased a MoneyBack endowment plan with an annual premium payment of Rs.8800/- for 10 years and a policy term of 20 years. So to receive all the benefits and the returns of the policy at maturity, he is required to pay the regular premium every year. In case he defaults to the regular premium payment, the insurance company will offer him a grace period to pay the due amount. Upon the completion of the grace period with pending payment, the policy will tend to lapse.

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