Are there discounts for early insurance premium payments?

Both health and life insurance policies offer premium discounts for customers who pay their entire year’s premium in one go rather than opting for half-yearly or quarterly instalments. The discounts are typically 2-5% of the overall annual premium amount.

These savings provided by insurance companies stem from two key benefits of receiving a lumpsum premium upfront -

1. Ability to invest the amount early on and generate investment income from it rather than staggered investments spread over the year.
2. Administrative and operational costs related to multiple instalment collections are significantly reduced due to payment received in advance as a consolidated amount.