In many cases the insurance premium are paid on monthly basis, even though there are options to pay the same on quarterly or half yearly or annual basis. Paying the premium in the latter modes will entail you a mode rebate up to 3 %. Paying the premium in the former mode will squeeze you up with another 5% loaded to your monthly premium, unless it is monthly premium under Salary Savings Scheme.
It may be a convenient mode of monthly payment for employees coming under Salary Savings Scheme. But, even then you should change your mode of remittance.
As discussed earlier, you can have a savings of 3%, if you opt for annual mode of paying premium.
If you follow the procedure laid down here under, there will be a savings of another 8% approximately.
Right on the day of taking the life insurance, open on recurring deposit with monthly installment equal to around 7.75% for a period of one year with interest at 10%. This way, the proceeds will be ready for you to meet the annual premium for the next year. For this, you should utilize another benefit given by the insurance companies as grace period of one month. If you do not want to enjoy the grace period, you have to commence the recurring deposit one month earlier to the date of taking the policy so that the maturity date coincides with the due date of the premium due date. The recurring deposit will yield in investment in the range of about 8% of the annual premium. If you still further plan, if you want to take the life insurance in the next year, start the recurring deposit with the tenors as above not itself so that the proceeds can be utilized for the annual premium when you take up the policy.
The employees coming under Salary Savings Scheme may forthwith switch to the annual mode to take the above benefits. The problem here is that in the first year, there will have to be double outgo of cash one towards the policy under Salary Savings Scheme and another for the recurring deposit.
For non employees, not covered by such a scheme, the benefit will be a further 5%, if they opt for the annual premium.
For certain policies, large sum assured rebate is also given. You may also enjoy that if you select the same.
Besides, some agents are giving you discount to a great extent say even about six month premium, in the initial year. You may search and choose such agents and grab that opportunity also.
Plan your premium payment, enjoy all the benefits, available to the policy holders and save substantially..