Summary of this article
Premium financing lets policyholders pay insurance premiums in smaller installments instead of a single large payment.
The option can help ease cash flow during high-expense seasons like Diwali.
Some platforms offer no-cost EMIs, but borrowers should still check for hidden charges and repayment conditions.
Experts suggest reviewing your policies and cash flow before opting for financing to avoid coverage lapses.
Diwali is typically seen as a time to reset many things, from cleaning homes, renewing bonds, and, for many, reassessing finances. Amid rising expenses and festive spending, reviewing your insurance coverage often falls to the bottom of the list.
But this season, a growing number of insurers and fintech platforms are making that step easier through something called premium financing.
Simply put, premium financing allows you to pay your insurance premium in smaller instalments, monthly or quarterly, instead of one heavy lump sum. It's similar to how EMIs work for gadgets or cars, but here, it helps spread the cost of protection.
Says Hanut Mehta, CEO and Co-founder at Bimapay Finsure, "As the cost of living goes up and the financial obligations continue to grow, it is sometimes hard to afford even an annual insurance payment in one lump sum. Individual premium financing, in this aspect, is one of the options that can be used to make insurance easier to manage. This will enable you to make your insurance payments easily with monthly instalments rather than making a single payment."
He further adds, "This can be of great help to those who already have insurance since you can save your money, keep your investment plans and better manage your monthly cash flow. Under premium financing, you do not have to worry about paying a huge sum of money at once because you can still enjoy coverage."
With living costs rising, paying a large annual premium upfront can feel restrictive. Premium financing can ease that burden, particularly during a season when expenses tend to pile up.
Some digital platforms, in fact, offer no-cost EMI options where policyholders can maintain insurance coverage without paying extra interest.
That said, it is not a one-size-fits-all solution. For those considering it, here are a few things to keep in mind:
It is always important to check the 'fine print'. Some "no-cost" plans may include hidden processing fees or penalties for delayed payment.
Depending on the amount, a lender may check your credit score or require minimal documentation.
It is always advised to stick to regulated platforms that use verified digital KYC and fraud detection systems for individual premium financing
Mehta points out that there are a few things to know before deciding on premium financing, for instance, the lender can check your credit or request collateral depending on your policy and the amount you wish to finance.
"Funding is normally charged with interest, and it is prudent to compare rates and be aware of the overall cost. You must also ensure that your EMI payments are done on time to prevent lapses in your coverage," he adds.
He further explains that for insurers, premium financing is not just about making insurance more accessible; it's also about risk management. "Insurers must strike a balance between affordability and minimising exposure. Using smart credit assessments and transparent repayment terms can help achieve that," he says.
Ultimately, premium financing is not about making insurance cheaper; it's about making it manageable. For those who often delay policy renewals or hesitate to upgrade coverage due to cost concerns, it offers flexibility without losing financial discipline.
If you're reviewing your policies this Diwali, take a closer look at how you're paying for them. A smaller monthly payment might just make it easier to stay protected and stress a little less.
