Premium Break & Cover Continuation Benefit in Term Insurance

A premium break or cover continuation benefit is a built-in feature in many modern term insurance plans that lets you defer premium payments temporarily without losing policy continuity.

It is usually offered at no extra cost and is intended for short-term financial disruptions such as job loss, income gaps, or business slowdowns. While premiums are deferred, the policy remains in force, and any claim during this period is paid after deducting the unpaid premiums. This structure strikes a balance between continued protection for the policyholder and risk control for the insurer.

How Does the Premium Break or Cover Continuation Benefit Work?

While insurers use different names for this feature, the underlying structure is broadly the same across term plans. Here’s how it typically works.

1. Minimum Policy Duration

This feature is not available from day one. Most insurers allow it only after you have:

• Completed 3 to 5 policy years
• Paid all premiums due up to that point in full
• Kept the policy active and in force

If these conditions are not met, the option cannot be exercised.

2. Prior Intimation Is Mandatory

You must inform the insurer before you stop paying premiums. In most plans:

• Intimation is required 30 days before the next premium due date.
• For monthly premiums, the window is usually 15 days.

If a premium is missed without prior notice, the policy moves into the grace period and will lapse if payment is not made.

3. Duration of the Premium Pause

The premium deferral period is typically capped at up to 12 consecutive months, after which premium payments must be resumed in accordance with the policy terms.

Depending on your payment mode, this could mean deferring:

• 1 annual premium
• 2 half-yearly premiums
• 4 quarterly premiums
• 12 monthly premiums

This limit is fixed per break and cannot be extended beyond one year.

4. What Happens to Your Coverage

During the premium break or cover continuation period:

• Your base life cover continues
• In many plans, riders also continue, though some insurers suspend rider benefits (this must be checked in the policy wording)
• Claims remain fully valid

If death occurs during this period, the insurer settles the claim after deducting the unpaid (deferred) premiums.

5. What Happens After the Pause Ends

Once the deferral period ends:

• You must pay the deferred premium along with the next due premium
• No interest or late payment penalty is charged, provided payment is made within the specified timeline
• If these amounts are not paid even after the allowed window, the policy may lapse or move to paid-up status, depending on plan terms

6. Frequency Limits

This benefit is not unlimited:

• It can usually be used multiple times during the policy term
• A minimum gap of 5 policy years is required between two premium breaks
• It is typically not allowed in the last year (or last few years) of the premium payment term

How Premium Break Works: Plan-Level Examples

While the core idea of a premium break is similar across insurers, the eligibility rules, timelines, and repayment conditions vary by plan.

Here’s how this feature works in some popular term insurance policies.

1. HDFC Life Click 2 Protect Supreme

HDFC allows a premium break benefit after 5 completed policy years, provided all premiums are paid and the policy is active.

Key points:

• Premiums can be deferred for up to 12 months
• Prior intimation is mandatory (30 days, or 15 days for the monthly mode)
• Coverage continues for both the base policy and riders
• If a claim occurs, the deferred premium is deducted from the payout
• The benefit can be used multiple times, but only once every 5 policy years
• Not available in the last policy year or the last 5 years of the policy
• No additional premium is charged for this option

2. Axis Max Life Smart Term Plan Plus

Axis Max offers this as a Cover Continuance Benefit, available after 3 policy years.

Key points:

• Allows deferral of premiums for 12 consecutive months
• Applies to base cover and attached riders
• Claim payouts deduct unpaid premiums
• Can be exercised multiple times with a 5-year gap
• At the end of the period, you must pay:
  • Deferred premium plus
  • The next year’s premium together
• If payments are missed beyond this window, the policy may lapse or move to reduced paid-up status
• No interest or revival charges apply

3. Bajaj Life eTouch II

Bajaj offers two versions, which are important to understand.

Auto Cover Continuance (In-built)

• Available after 3 policy years
• Premiums can be deferred for up to 12 months
• Coverage (including riders) continues
• Claim payouts deduct unpaid premiums
• No interest or extra premium charged
• Can be used multiple times with a 5-year gap

Premium Holiday (Paid Option)

• A separate, paid feature selected at policy inception
• Allows skipping premiums for 1, 2, or 3 years
• Available only if the policy term and premium payment term are 20 years or more
• If unused, the remaining premium holidays will be used to waive the last 1, 2, or 3 policy-year premiums, depending on how many holidays remain unutilized.
• Life Stage Upgrade is not available if this option is chosen

This distinction matters: Auto Cover Continuance is free; Premium Holiday is not.

4. ICICI Prudential iProtect Smart Plus

ICICI Prudential offers a premium break after 5 completed policy years.

Key points:

• Premiums can be deferred for 12 months
• Coverage continues for the base policy and riders
• Claim payout deducts deferred premiums
• Requires prior written request
• Must pay:
  • Deferred premium plus
  • Next due premium within the grace period
• Can be used multiple times with a 5-year gap
• Not allowed in the last 3 years of the premium payment term

5. Aditya Birla Sun Life Super Term Plan

Aditya Birla offers this as a Cover Continuance Benefit, available after 5 policy years.

Key points:

• Allows deferral of up to 12 months of premiums
• Claim payouts deduct unpaid premiums
• Can be availed up to three times during the policy term
• Requires advance intimation (up to 60 days)
• Riders may lapse or convert to reduced paid-up during the deferral period
• No additional premium is charged

Is Premium Break or Cover Continuation Benefit an Important Feature?

It’s a good-to-have feature, not a decision-making one. This benefit helps if you face short-term financial stress, but it does not replace:

• Emergency savings
• Income protection
• Long-term affordability planning

Also, deferred premiums don’t disappear. You must be financially prepared to pay both the skipped year’s premium and the next year’s premium together. If a term plan only looks attractive because of this feature, that’s a red flag. Claim reliability, clean policy wording, and long-term premium affordability matter far more.

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Ditto’s Take on Premium Break or Cover Continuation

This is a genuinely useful feature because it is free in most plans, but it is also easy to misuse. What we commonly see go wrong is that policyholders miss intimation deadlines, assume premiums are permanently “waived,” or underestimate the cash flow impact of having to pay two years’ premiums together once the break ends.

If you plan to use this feature, track timelines carefully and make sure you are financially prepared for the deferred payment. The protection continues only if the rules are followed exactly.

Premium break and cover continuation benefits offer temporary breathing room, not long-term relief. They are helpful during short-term income disruptions but come with strict conditions.