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Premium
June 07 , 2012

A Premium is the payment you make towards a Life Insurance or Medical Insurance plan, to avail of its benefits. While plans may give a facility for paying premiums monthly or quarterly, it is the Annual Premium that is the important number to note. Most aspects of the policy – such as life cover, medical cover, fund value, charges, etc are a function of the Annual Premium.

In Term Life Insurance plans or Medical Insurance plans, the premium only goes towards the risk of giving you the life or medical cover. In that sense, these are 'pure' plans. In more complex products like Endowment Plans, Unit Linked Plans and Universal Life Plans, part of the premium goes towards giving life cover, while the remaining goes into an investment fund on your behalf.

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