The premium paying term or PPT is the period for which you must pay the required premiums for your life insurance policy. In other words, it is the term for payment of premiums. Generally, iIn case of Term Insurance, the premium payment term is usually equal to the policy term. However, some insurance policies like Guaranteed Income Plans or ULIPs, allow the policyholder to select a premium-paying term shorter than the policy term. These policies may also offer you flexibility in terms of choosing the premium payment term, for example 5, 8, 10 & 12 years.
Some insurers allow the insured to get insurance benefits even if they cease paying premiums after a particular duration of time by turning the standard insurance policy into a paid-up policy.
There are three main options for policy premium payment terms available:
- Regular Premium Payment Term: If the premium payment term is the same as or equal to the policy term, you must pay premiums for the whole policy term. This is referred to as regular premium payment. For example, if the policy period is 20 years, you must pay premiums for 20 years.
- Limited Premium Payment Term: The other possibility is that the premium paying term is shorter than the policy term. In such cases, you pay premiums for a limited time, but the life insurance coverage continues until the policy term expires. For example, you may select a policy duration of 20 years but pay premiums only for the first ten years.
- Single Premium Payment Term: The entire premium amount is paid as a lump sum in one installment for the policy coverage till the end of the policy. For example, you may select a policy duration of 60 years but pay premium once as a single premium.
Siddhant Dubey - Writer & Photographer
Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision.
