Glossary · Insurance
Premium
The amount paid by the policyholder to the insurance company, either as a lump sum or periodically, to keep the insurance cover active.
Premiums are calculated based on the sum assured, age of the insured, term of the policy, type of cover, smoker status, and medical history. Premiums can be paid monthly, quarterly, half-yearly, or annually — annual payment usually gets a discount. Premiums are tax-deductible under Section 80C (life insurance) and Section 80D (health insurance). Lapsed policies can be revived within the grace period by paying the unpaid premiums with interest.
Examples
A 40-year-old pays ₹25,000 annual premium for a 50-lakh term plan, with the premium remaining constant for the 30-year policy term.