Definition: Premium paying term is the total number of years for the policy holder to pay the premium.
Definition: Policy term is normally equal to the premium paying term. However, some insurance policies give the insured the autonomy to choose a premium paying term lower than the policy term. For instance, insurers allow the insured to get the insurance benefits even if they stop the premium payments after a stipulated period of time by converting the normal insurance policy into a paid up policy.
Here the sum assured will be calculated by using the formula.
(Total number of premiums paid/Total number of premiums payable) X Sum Assured + vested bonus (if any)
Also See: Life Assured, Non-Standard Life, Premium, Adverse Selection, Subrogation, Paid-Up Policy, Mitigation
