Now a days life Insurance companies have started providing additional discount in premium you pay for your Term insurance policies. Before we look at how you can avail this additional discount in your term plan premium, Lets understand what a Term plan is?
What is a Term Plan?
Human life is at the risk of death due to natural or accidental circumstances. When a person dies or becomes disabled then there is loss of income for the family. The survival for the family can become difficult. To protect your family from such a situation, Term plan is the best solution.
Term insurance being the purest form of life insurance policy provides you a high amount of insurance cover at a very low premium.
Let’s take an example of a term plan from HDFC Life Insurance:
HDFC Life Insurance provides Term plan in 2 different modes online term plan and offline term plan. In Online mode it offers ‘HDFC Click to Protect’ and in offline mode it offers ‘HDFC Term Assurance Plan’. In this article we will discuss about features of HDFC Term Assurance Plan and how you can save some amount of premium when you opt for it.
HDFC Term Assurance Plan
HDFC Term Assurance Plan is an offline term plan which covers individuals from the age of 18 years to 55 years and the maximum age at expiry of this term plan can be 65 years. This term plan can be taken for a minimum term of 10 years and the maximum term of 30 years. The minimum sum assured in this term plan has to be Rs. 8 lakhs while minimum premium would be Rs. 2,000. The summary of the features of this term plan is mentioned in the below table:
|HDFC Term Assurance Plan |
|Minimum Premium || Rs. 2,000 |
|Minimum Term ||10 |
|Maximum Term ||30 |
|Minimum Age ||18 |
|Maximum Age ||55 |
|Maximum Term Plan Expiry Age ||65 |
|Minimum Sum Assured ||Rs. 800,000 |
When you decide to opt for HDFC Term Assurance Plan, you have the option of saving some amount of premium. The premium can be saved by choosing to pay by ECS mode out of the various premium payment modes available in HDFC Term Assurance Plan. Below is the summary of Premium charged for term plan through various payment modes. The below mentioned premium is for a 30 year old individual for a sum assured of 1 crores for 30 years.
|ECS ||Rs. 22,376 |
|Cash ||Rs. 24,615 |
|Cheque ||Rs. 24,615 |
|Draft ||Rs. 24,615 |
|Online Payment ||Rs. 24,615 |
|Credit Card ||Rs. 24,615 |
|Others ||Rs. 24,615 |
In the above table you can clearly see that out of the 7 premium payment modes available, HDFC is providing a 10% discount to pay through ECS mode. If you opt for ECS mode you do not save only on the 1st premium but in all the subsequent years you have to pay the reduced premium amount. Opting for an ECS mode for premium payment can be a good premium saving option for those who require huge insurance cover and have to pay high premium for that.
Why is HDFC providing discount on premium through ECS mode?
HDFC is providing discount on premium as it gives them the authority to debit the customer’s account every year without taking future approvals. It saves collection cost for HDFC and they are also certain about collecting premium every year.
So what’s the conclusion?
Premium payment through ECS can be a good option for both you as an insured and HDFC as an insurance company as it helps to save cost to both the parties. This is just one of an example where one has advantage to reduce his/her insurance cost. Before taking this or any other policy, you need to check all conditions that are associated with the policy and ways by which you can reduce your premium cost. For more clarity on your insurance needs, you can speak to your financial planner, and also check if this can be the best policy which you should go for.