What Are Life Insurance Premiums
December 14, 2016
If you take out any insurance, you have to pay an amount each month to enjoy services from the insurance company.So What Are Life Insurance Premiums? An insurance premium is an amount of money that you have to pay for the actual insurance policy. This premium is income for the insurance company who in turn provides coverage for claims made against the policy.
With life insurance, when the person dies, money is going to the beneficiaries to make life easy for them after the person is no longer there. Whether you opt for term-, whole-, or universal life insurance, there will be premiums to pay, and the amount of cover you choose will determine how much you will have to pay.
So What Are Life Insurance Premiums
Life insurance premiums are the sum of money an insurance company is going to charge you for active coverage. You can pay these rates in small quantities during the year. These premiums don’t stay the same year after year, and they can change.
Claim a Lot – Pay a Lot
Insurance companies can increase premium rates for different reasons. One of these is because of the high number of claims on the policy. An insurer determines its prices on what it believes it will pay throughout the life of the policy.
With any insurance company, the idea is for them to pay the policyholder less than what they pay in for life cover. If you as a policyholder, file regular claims against the insurance policy, the insurance company ‘loses’ too much money to you. It will raise your premiums so as to recover these costs resulting from these ongoing claims.
If you don’t pay your premium and you get behind, your life insurance policy will be considered void. Certain factors will determine the sum or premium you pay. Some of these are –
- Your health and your age
- The area you live in
- People’s habits and their history can also cause the premium to be higher or lower. With the medical insurance premiums, for instance, people with health problems or who engage in unhealthy activities such as smoking, will pay more for insurance than healthy individuals who don’t smoke. There are insurance companies who will offer a reduction on premium if you have positive lifestyle changes, such as quitting smoking.
- The cost of a premium can vary widely among providers. This is precisely why experts recommend that consumers get some quotes before committing to any policy.All kinds of life insurance offer valuable protection, but you need to research life insurance as each one comes with different features. Our lives evolve – they change. Your insurance needs to change as your life goes through various stages.
Each Lifestyle will Require a Unique Policy
Life insurance policies differ. And you’ll want the one that is affordable for you. So that you can pay it as you’re meant to, and reap the rewards when the time comes. I hope this has answered What Are Life Insurance Premiums for you.
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All info was correct at time of publishing