Tips for Timely Premium Payments On Ulips and Pension Plans

Why Pay Renewal Premiums For Ulips And Pension Plans? 

Timely renewing your ULIPs and pension plans ensures uninterrupted financial growth and protection. Missing premium payments can lead to policy lapses, loss of benefits, and additional charges for reinstatement. For ULIPs, timely renewal keeps your investments compounding, helping you build wealth over time. In pension plans, regular contributions ensure a steady retirement corpus. Many policies also offer life cover, which could lapse if premiums aren’t paid. Setting reminders or automating payments can help you stay on track and secure your financial future. 

Top 15 Tips To Pay Your Premiums On Time: 

Paying your premiums on time keeps your ULIPs and pension plans active, ensuring continuous benefits and financial security. Here are 15 smart tips to help you stay on track with timely payments: 

1. Set Up Automatic Payments: 

• Use ECS/NACH: Enrol in an auto-debit facility via Electronic Clearing Service (ECS) or National Automated Clearing House (NACH) to ensure automatic premium deductions from your bank account. 
• Credit Card Auto-Pay: If your insurer allows, link your credit card for scheduled premium payments. 
• Standing Instructions: Set up standing instructions through your net banking account to avoid manual intervention and ensure timely payments. 

2. Leverage Insurer’s Digital Platforms: 

• Most insurance providers offer mobile apps and websites for easy, premium payments. Download the app and set reminders. 
• Enable SMS and email notifications from your insurer to get timely alerts before your due date. 
• Some insurers also allow UPI and wallet payments, making paying even more convenient. 
• You can set up a reminder with Paybima to initiate renewal reminders so you pay your premium on time. 

3. Opt for Annual or Long-term Premium Payment Mode: 

• If feasible, opt for an annual premium payment instead of monthly or quarterly payments to reduce the risk of missing deadlines. 
• Annual payments also help save on costs, as some insurers provide discounts on long-term premium payments. 

4. Use a specific bank account or a particular credit card for auto-payments: 

• Open a separate savings account exclusively for premium payments. 
• Transfer the required amount at the beginning of the year to ensure adequate balance when the premium is due. 
• This prevents fund shortages and eliminates dependency on other expenses. 
• Or use a specific credit card with a limit which is more than the premium amount so that you can pay the premium from your credit card and earn points on the same as well. 

5. Utilise the Grace Period Wisely: 

• ULIPs and pension plans generally provide a grace period of 15-30 days for premium payments after the due date, depending on the mode of payment. Monthly plans usually have 15 days, and quarterly, half-yearly or annual mode payments have 30 days of grace period. 
• If you miss the original due date, pay within the grace period to prevent policy lapse. 
• Your policy benefits continue in the grace period as well. 

6. Maintain an Emergency Fund for Premium Payments: 

• Set aside an emergency fund that covers at least one year’s premium. 
• This is a backup in case of unexpected financial constraints, ensuring uninterrupted policy benefits. 
• This amount could be saved as a bank fixed deposit or a liquid mutual fund to redeem it at the time of premium payment without any stress. 

7. Monitor Policy Statements Regularly: 

• Periodically check your policy account statements to ensure premium payments are updated correctly. 
• If there are discrepancies, immediately report them to your insurer to avoid policy disruptions. 

8. Utilise Tax Benefits as a Motivation: 

• Remember that ULIP and pension plan premiums qualify for tax deductions under Section 80C for ULIPs upto Rs 2.5 lakhs of annualised premium and 80CCC for pension plans under the Old Tax Regime. 
• Timely payments ensure continued financial protection and help maximise tax-saving benefits. 

9. Plan Premiums Alongside Annual Financial Goals: 

• Treat your premium payments as part of your financial planning routine. 
• Align them with annual bonuses or investment cycles to ensure smooth cash flow. 

10. Set Reminders and Use Technology: 

• Use apps like Google Calendar or budgeting tools to set premium due-date reminders. 
• You can also opt for SMS/email alerts from banks for auto-debit transactions. 

11. Consider ULIP Top-Ups When Possible: 

• If your ULIP allows top-ups, consider making additional contributions when you have surplus funds. 
• This can enhance your investment value while also reducing the burden of future premiums. 

12. Know the Policy Revival Process: 

• If your policy lapses due to non-payment, insurers offer a revival period (typically 2-4 years) during which you can reinstate it. 
• However, revival may come with penalties or medical re-evaluations, so avoiding lapses altogether is best. 

13. Understand Partial Withdrawals in ULIPs: 

• Some ULIPs allow partial withdrawals after a lock-in period (usually 5 years). 
• If you are facing financial difficulties, check if you can withdraw funds instead of stopping premium payments. 

14. Communicate With Your Insurer for Flexible Options: 

• Some insurers offer premium holiday periods or premium reduction options in case of financial constraints. 
• Contact your insurer to explore flexible payment options instead of defaulting. 

15. Renew with Paybima: 

• You will get timely reminders from the advisors at Paybima so that your policies never lapse. 
• The Paybima experts would handle all service and premium payments.