Term insurance policies provide financial protection to the policyholder's family in case of any unforeseen event. However, sometimes, policyholders may find it challenging to pay the premiums due to financial constraints. This is where the Premium Break Benefit or Premium Holiday Feature comes in. Let's explore what this feature is and how it works.
What is Premium Break Benefit or Premium Holiday Feature?
Premium Break Benefit or Premium Holiday Feature is a feature that is available in some term insurance policies. It allows policyholders to take a break from paying premiums for a specific period without losing the policy benefits. During this period, the policy remains active, and the policyholder continues to enjoy coverage benefits without paying premiums.
How does Premium Break Benefit or Premium Holiday Feature work?
The Premium Break Benefit or Premium Holiday Feature works differently depending on the insurance provider and the policy terms. Some policies allow policyholders to take a break from paying premiums for a specified number of months, while others may offer it as a fixed number of premium holidays throughout the policy term.
Example: Let's take an example to understand the Premium Break Benefit or Premium Holiday Feature better. Suppose Mr. Sharma has a term insurance policy with a sum assured of Rs. 50 lakhs and a premium payment term of 20 years. The policy has a Premium Break Benefit or Premium Holiday Feature that allows him to skip premium payment for six months after paying premiums for five consecutive years.
Suppose Mr. Sharma has been paying premiums for the last five years regularly. Due to financial constraints, he cannot pay the premium due in the sixth year. In this scenario, he can avail of the Premium Break Benefit or Premium Holiday Feature and take a break from paying premiums for the next six months. During this period, the policy remains active, and his family will still receive the sum assured in case of any unfortunate event.
Is Premium Break Benefit in Term Insurance an Important Feature?
Premium Break Benefit or Premium Holiday Feature is a useful feature that provides flexibility to policyholders to manage their premium payments in case of any financial constraints. It is essential to understand the terms and conditions of the feature and its impact on the policy benefits before availing of it.
To know more about a Term Plan that offers Premium Break Benefit for up to 12 months, click here.
Neha Panchal - Financial Content Writer
Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.
