Why does a customer have to wait until the due date to pay the insurance premium? Why not pay the premium in advance? The main reason for this is that policyholders do not receive extended benefits in doing so. It naturally prevents the user from making early payments. Potential changes in the financial condition of the consumer, for example, lack of availability of cash will force the deferral of premium payment to be postponed, which will affect the continuity of the life insurance policy.
The premium can be paid in advance
The country’s insurance regulator has already recognized the need to encourage the consumer to pay the premium early. The Insurance Regulatory and Development Authority of India has recently issued a guideline in this regard. The IRDA guidelines state that insurance companies should offer discounts on prepaid premiums. There are two benefits to this. One is that the regulator can prevent a policy failure. Secondly, customers will also get premium discounts.
What are the benefits of advance premium payment?
Being able to pay in advance in advance eliminates the worry of default. Users often fall short of the premium due to not having enough money on hand or finding the due date. It also causes the policy to be lost prematurely. With the Advance Payment Service, customers can conveniently pay their premiums at any time and secure their insurance coverage.
Discount benefits are available to those who pay the premium in advance. Customers can avail of discounts on advance premium amounts. Life insurance is a long-term financial goal. Maintaining the term of the policy is essential to get the maximum benefit out of it. By paying the premium in advance, the user can plan it accurately and adjust the budget accordingly. Paying the policy on time can also ensure that the insurance is active by paying the premium in advance.
Policyholders can also use this for their tax benefits. Failure to pay the premium in a financial year will not entitle them to tax deduction. This in any way prompts the user to find the amount and pay the premium earlier. Early advance premium payments will also make a difference in the insurance sector. The earlier the policies are canceled, the lower the cost of operations on the part of the company associated with it.