Insurance premiums are the amount of money paid for an insurance policy. If payment is skipped and the grace period is exhausted, the insurance coverage will be lost. That financial protection gives fewer financial worries, peace of mind, and helps you focus on your dreams.
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It’s important to understand which type of insurance payment is suitable for you and weigh the pros and cons of each.
a) Regular Premiums and Single Premiums
Regular premiums are premiums paid at specified intervals over a definite period. For example, monthly, quarterly, semi-annually, or annually. Generally, the higher the frequency of your premium payments, the higher is the cost of your policy but the lesser the amount to be paid per instalment. It is suitable for salaried individuals.
Single premium is where the entire sum is paid at once. It is suitable if you are self-employed or have a cyclical income.
Factor | Regular Premium | Single Premium |
Factor | Regular Premium | Single Premium |
Affordability | You have recurrent income and feel more comfortable paying smaller amounts periodically. | Suitable if you have a large sum of money that is lying idle. Will fetch an attractive discount that reduces your total premium outgo if it is a traditional plan. |
Investment risk | If an investment-linked plan, this payment shields you from the ups and downs of the capital markets by averaging the amount invested into the selected funds under different market conditions. | A one-time investment that exposes you to market volatility. |
Tax benefits | Can redeem for every financial year. | Can redeem only for the year the policy was bought. |
Extended benefits (riders) | May offer extended benefits for an increase in premium such as coverage for death or injuries resulting from an accident. | Less likely to be offered because the price has been paid in full. |
Premium waiver | May offer premium waivers such as when diagnosed with advanced stage critical illnesses. | Less likely to be offered because the price has been paid in full. |
There is also a limited premium payment option where policyholders pay the premium for the entire policy in a limited period of time, such as 5 or 10 years. It is suitable for people unsure about paying premiums long into the future or who would like to lay back and enjoy their retirement.
b) Fixed premium and flexible premium
Fixed premium is suitable for those who want better control of their budget. They are used for term life insurance, whole life insurance, or guaranteed universal life insurance. Flexible premium is suitable for those who are unsure of what the future holds. They are used for adjustable life insurance.
Factor | Fixed Premium | Flexible Premium |
Factor | Fixed Premium | Flexible Premium |
Changes to policy | Premiums are unchanged until policy maturity. | Allows choosing higher or lower premiums at numerous points throughout the policy's life, based on changes to the policy such as increasing the sum assured. |
Cash value/Account value | Fixed. | The cash value/account value of these policies is dependent on the performance of the investment portfolio associated with them. |
Cost | Long-term cost savings due to paying the same amount despite inflation. More expensive initially, but the fixed rate makes it more affordable in the long term. | Flexibility comes with higher premiums. |
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These top-ups are associated with investment-linked insurance. It is the topping-up of additional premium at any point of time to increase the account value without much charges attached to it. This can be done regularly or on an ad-hoc basis. Regular top-up follows the current premium payment mode of your policy. Premium top-up is to take advantage of a well performing investment-linked plan by increasing its investment component. This is provided any outstanding premiums have been paid on time. Top-ups can be stopped and the insurance policy will not terminate.
Source: Giphy
Today, paying insurance premiums can be really easy with various online methods such as internet banking, auto-debit, and e-Wallet. FWD Insurance offers multiple convenient and secured payment options to pay your premium. If you have many things going on and do not want to forget paying your premium, it’s best to sign up for auto-debit so that your protection continues without any inconvenience. Here are ways you can keep your premium payments without the hassle.
Type of payment | Suitability |
Type of payment | Suitability |
Auto-debit | For a busy lifestyle. Payments are made automatically with either a credit or debit card. |
Salary deduction | If you’re working for the government, you can apply for your premium to be deducted from your monthly salary. |
Future premium payment | Pay your premium in advance and enjoy peace of mind on your policy renewals. |
Your insurance premium is determined by age, gender, health and medical history, job, and lifestyle. For a quick understanding of how these factors affect your premium, check out our article How Are Your Insurance Premiums Determined?
While it’s important to continue paying for premiums, it can be heavy on the wallet. That’s why FWD Insurance has introduced i-Series! Starting from only RM3.90 a month, find the right plan for you without having to leave your bed. i-Series has life insurance (i-Care, i-FlexCover), medical insurance (i-Med), and critical illness coverage plans (i-Protect & i-Protect Plus). Get an instant quote now here.