Close
Close

Buy a life insurance plan in a few clicks

Now you can buy life insurance plans completely online right here.

  • Kotak e-Term Plan

    Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.

  • Kotak Health Shield

    The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.

  • Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Back

What is the Difference Between Limited and Regular Pay Insurance Plan?

Buy Life Insurance Now
  • 11th Mar 2021
  • 294
What is the Difference Between Limited and Regular Pay Insurance Plan?

Life insurance policies offer several unique features to make the plan more convenient for you. One such feature is the mode of premium payment. Typically, there are two types of premium modes – regular and limited. Each has its advantages and disadvantages, and the ultimate choice between the two premium modes depends on your financial situation, life stage, and monetary goals.

Here is everything you should about limited and regular pay insurance plan and their differences:

What are the limited pay insurance plans?

These insurance policies allow you to pay premiums only for a specific pre-agreed period, post which you are not liable to pay anything. However, the policy continues for the full term, irrespective of the premium duration. In such insurance policies, the premium payment term is less than the policy tenure.

For example; X buys a limited pay insurance policy at the age of 40 for 20 years. He expects to pay all premiums in his working years and wishes to retire (at 55 years) without any financial burden. He opts to pay premiums only until the age of 50. But he will get an insurance cover up till the age of 60.

What are regular pay insurance plans?

A regular pay insurance plan is an insurance policy where the premium payment term and policy tenure are the same. You pay premiums for the entire policy duration and enjoy protection for the whole insurance term.

For example; Y is 40 years old and owns a small business and can manage regular premium payments. He takes a regular pay insurance plan for 20 years and pays premiums throughout the term (60 years) while enjoying insurance protection until 60 years.

What is the difference between limited and regular pay insurance?

Limited Pay Regular Pay
Shorter premium payment period Longer premium payment period
Full coverage for the entire policy period irrespective of limited premium tenure. Full coverage for the entire policy period, subject to regular and timely premium payments.
Low chances of policy lapse due to the short payment period Higher chances of policy lapse due to a longer payment period.
Financial burden is distributed in a shorter time period. Financial burden is distributed across a larger span of time.
More financially burdening since premium out-flow is concentrated. Less financially burdening since premium out-flow is spread.
No risk of premiums rising since premiums are paid out in a specific time. Risk of premiums rising with age.
Potential rewards and discounts offered because of the advance premium payment No potential discounts or rewards.
Premiums are paid off before retirement or a specific milestone. Premiums continue till the end of the policy term.
Maximum tax benefits can be reaped in the limited payment schedule under Section 80C. Tax benefits are spread across the entire life insurance policy period.

How to choose between the two?

The ultimate choice between a limited and regular pay insurance plan depends on your financial situation, existing liabilities, future plans, retirement age, etc. However, a limited pay option is more suitable for short career span people like sportspersons, etc., or those who work on commissions, bonuses, or under uncertain work conditions like army personnel. Moreover, those that are closer to retirement can also consider a limited insurance plan. Alternatively, people with fixed income sources, limited budgets, or those far from retirement, can opt for a regular premium payment option.

In addition to selecting the right premium payment mode, be sure to choose the right insurer first. Check different life insurance plans plans offered by Kotak Lifewith flexible premium options, economical premiums and competitive features, and make a smart choice.

- A Consumer Education Initiative series by Kotak Life

Tags

Also read

  • 10 Most Frequently Asked Questions - FAQs on Term Insurance

    10 Most Frequently Asked Questions - FAQs on Term Insurance

    A term insurance plan is one of the most important investments you can make to provide your loved ones with financial security in case if an unfortuna...

    Read more
  • 5 Reasons Why You Need Life Insurance in College

    5 Reasons Why You Need Life Insurance in College

    Lower Premium is one of the advantage of life insurance for college students. Click here to know the five reasons why you need to buy an insurance pol...

    Read more

Related Plans

  • Kotak e-Term Plan - Online Term Insurance

    Kotak e-Term Plan - Online Term Insurance

    Kotak e-Term Plan is a pure term insurance plan that provides a holistic life protection at affordable prices. Find out the eligibility criteria, key ...

    Know more
  • Kotak Sampoorn Bima Micro-Insurance Plan

    Kotak Sampoorn Bima Micro-Insurance Plan

    Kotak Sampoorn Bima Micro Insurance Plan is a single premium plan with fixed term of 5 years to cater to the needs of low-income customers.

    Know more
  • Kotak Leave Encashment Group Plan

    Kotak Leave Encashment Group Plan

    Kotak Leave Encashment Group Plan is designed to cater to the needs of employees’ leave encashment liabilities increasing over a period of time.

    Know more
  • Kotak Assured Savings Plan

    Kotak Assured Savings Plan

    Kotak Assured Savings Plan is an affordable protection plan that enables you to accumulate wealth and strengthens your finances for the future.

    Know more