What is the Full Form of PPT in Insurance?
The PPT Full Form in Insurance is Premium Paying Term. It stands for the premium-paying term, which is the period in the life insurance during which the assured policyholders are required to pay the premiums for the specified insurance cover. Understanding PPT is very important because it directly affects financial planning and the structure of the insurance policies.
Summary of Premium Paying Term:
In the simplest words possible, Premium Paying Term (PPT) is the term in which a policyholder has to pay premiums towards his life insurance policy. Typically, it is aligned with the policy term in term insurance, while in other policies, such as Guaranteed Income Plans or ULIPs, flexibility is provided to select a PPT of a duration shorter than the policy term.
Importance of Premium Payment Term:
As you say, it is, therefore, very essential to choose the right Premium Paying Term in financial planning. One should give due consideration to his financial ability and his preference for premium payments. A person should consider whether they would want short terms of paying premiums fast or spreading the premiums for much longer but with a lower sum assuredly being paid out, always keeping in mind the financial goals.
Types of Premium Payment Terms:
- Regular Premium Payment Term: In this model, premiums are paid throughout the entire policy term.
- Limited Premium Payment Term: Policyholders pay premiums within a short specified duration while keeping the coverage active for the entire policy term.
- Single Premium Payment Term: A lump sum premium is paid upfront, covering the policy term in its entirety.
- Flexible Premium Payment Term: A term where there is a provision for the option to change the amount and frequency of premiums within certain specified limits.