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Premiums can be paid on a monthly, quarterly or annual basis. Most policies are paid on a lifetime basis, meaning the premiums continue for a long as the policyholder owns the policy. Some companies now offer what are referred to as 10-pay or limited pay products. Under these plans, you pay premiums for a certain period of time, generally 10 years, after which the policy is paid in full for the remainder of your life.
Premiums may not be increased for you individually once you have purchased your policy because of changes in your age or health. However, carriers may, with the approval of the state insurance commissioner, increase rates for a class of policyholders. A class of policy holders generally refers to a group of policyholders who purchased the same plan and where in the same age group at the time of purchase.
You can choose to cancel your policy or the carrier will cancel your policy if you fail to pay the premiums when they are due. However, the carrier my not cancel your policy because of changes in your age or health.
Premiums for federally tax qualified plans are tax deductible, subject to certain limitations, and benefits paid under federally tax qualified plans are not taxable when received. Premiums for federally tax qualified plans are tax deductible along with other non-reimbursed medical expenses to the extent they exceed 7.5% of adjusted gross income, subject to the following limitations based upon age:
| Age |
Maximum Tax Dedictable Premium |
| Under 41 |
$260 |
| 41-50 |
$490 |
| 51-60 |
$980 |
| 61-70 |
$2,600 |
| Over 70 |
$3,250 |
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