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Looking to pay life insurance policy renewal premium; Here are your options

03 March 2017
Renewed your life insurance but how do you pay the premium?

By Sunil Dhawan

Life insurance is a long-term contract. To keep the life cover active, one needs to keep paying the premium regularly till the end of the contracted term. Therefore, ensure that you keep the policy in-force by renewing it well within the due date. If the premium due date in your life insurance policy is approaching, here are some of the options you can explore to help you pay the premium on time. Choose the one that suits you best and saves you time.

Payment by cheque
The traditional way of making renewal premium payments for your insurance policy is through cheque. For this, you would have to drop it in any of the designated drop boxes or submit at the insurer's office. As proof, you get a receipt that the cheque has been submitted. Importantly, write your policy number in addition to your name and phone number at the back of cheque or demand draft.

Related: Being asked to take a Medical Examination to get Life Insurance? Go for it! 

The policy is renewed subject to clearance of the cheque, hence make sure the cheque payment is done at least three days before the due date. You may also write the policy number on the front of the cheque beside the insurer's name. This ensures your cheque does not get misused.

Payment by credit card
You can pay your premiums using your credit card by filling up the credit card standing instruction form. The form may be downloaded from the insurer's website or can be collected from their office. This form, along with the photocopy of the front side (never reveal the back-side of your credit card carrying the CVV number) of your credit card, should be sent to the insurer's office. Alternatively, you canwalk into any branch, fill the form and get the card swiped. Ensure that you provide the authorization for a specific period of time while giving your mandate.

Related: Things to Consider Before Picking Up a Credit Card 

Payments at ATM
You may pay renewal premium even at ATMs. Few insurers have started offering such facilities in which the bank and the insurer enter into a tie-up. To avail such services, one needs to register the policy details at the bank's website. Ask your insurer for any such tie-up that they have with a bank.

Related: What do to do if you find yourself with fake cash 

Payments through SMS
Some insurers offer the facility of premium payment through SMS. Bank customers holding a debit card can pay using this method. They first need to pre-register through the bank's ATM to receive a dynamic unique PIN. The actual payment may be made without necessarily going to the ATM. Ask your insurer if they provide such a facility.
Bank account auto-debit facility
If remembering your premium due date has been difficult, you may choose the auto-debit way. Under this system, you may either set up a direct-debit or get it done through the electronic clearance system (ECS) mandate. By doing this, you provide auto-debit instructions to the bank to regularly debit your premium payments from your account. On every premium due date, your bank account gets debited automatically and money gets transferred to the insurer. You can avail this facility by submitting a filled-up mandate form along with a cancelled cheque at any of branches of the insurer. Before applying for this, check if such a facility is enabled with your bank. Some insurers offer such facilities only at the inception of the policy.

Bank collection centers
Some insurers have started tying up with banks for collection of renewal cheques. You need to know which banks have such tie-ups with your insurer near your location. One need not be a customer of such banks but may still use their services to pay renewal premium.

Online payments
If the due date is already near and access to a branch is difficult, going online is the best way forward. One needs to register on the insurer's website along with the policy number and other policy details. Thereafter, renewal premium payment can be done either through a credit card or net banking i.e. directly from your bank account.

Mobile payment
Few banks have started allowing payments to be made through mobile phones under the integrated mobile payment service (IMPS) feature. You would have to register your bank account to avail this service to pay your policy renewal premium.

Related: What makes mobile banking safe? 

For each payment channel, insurers have their own set of restrictions and conditions. Get to know these from your insurer to better manage your policies. Ensure that your address is updated in the insurer's records. Else it may happen that the renewal notice does not reach you on time. Also, keep a record and set up alerts in your phone and maintain a diary for due dates. Normally, there is a grace period of 30 days (15 days for monthly renewals) from the due date for paying the premium. However, making payments on time inculcates the habit of sticking to your commitments.

Souce: Economic Times


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