Limited Insurance Payment Policy: Is it a Good Option?

A life insurance policy is recommended for all adults as it offers peace of mind and financial security for their family members. However, for many people, it can be challenging to pay high premiums year after another. This is where a limited insurance payment policy comes in.

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What is a limited insurance payment policy?

In a limited life insurance policy, you can pay the insurance premium for a “limited” period i.e. for a few years but avail the insurance benefits for all life.
The following are some of the most common plans offered in this policy:

Life Income

In this, the insurer pays the beneficiary a fixed income all their life. So, it really depends on their own longevity- if they pass away within a few months after the insured person, then that would be the end of it. However, if they live a long life, then the insurer will have to keep on paying the income regularly until their demise.

Fixed-Period Income

In this, the insurer will pay the beneficiary a fixed income over a fixed period. So, even if they pass away, the insurer will continue making the payments until the period is over. This money can be used by the other family members.

Advantages of Limited Insurance Payment Policy

• Premiums are paid for only a certain period which is usually 5-15 years.
• Limited payment offers full coverage
• You can surrender the plan to receive the appropriate surrender value.

Disadvantages of Limited Insurance Payment Policy

• Although the payment period is short, the premium amount is higher than the standard life insurance policies
• High premium cost can force you to lower your expenses and make lifestyle changes