What Is An Insurance Premium?

If you have availed of insurance in the past, then you are probably aware of what an insurance premium is. For those who are still wondering what it is, let us provide you with the definition. Simply to put, an insurance premium is the amount that you have to pay the insurance company in order to make sure that you are still covered by insurance. Consider this as your basics when it comes to insurance and the financial obligations involved in getting one.

As mentioned above, it is the amount that you have to pay your insurance company. Again, the cost is not the same for all people. It depends greatly on several factors. Firstly is the amount of coverage that you desire, secondly is your health and thirdly is your age. Let us discuss these one by one. Insurance companies offer many packages for their clients. Along with the different packages comes with different rates. The more comprehensive the package, the higher the rate will be. The simpler and more basic the package, the less expensive the premium will be. Now what does our health have to do with it? A healthy person tends to get lower insurance rates for the simple reason that they are considered to be low risk by the insurance company. Let’s say if you are getting a health insurance. A sick person is bound to get higher rates because there is also a higher chance for that person to end up in a hospital. The last factor is age. Age and health are greatly intertwined. An older person is more likely to be sickly than one who is young and in his or her prime.

The insurance premium amount should be clearly stated in the insurance policy where the client and the insurance company signed. That means that the insurance policy holder agrees to the policy and is thus liable to pay for the premium regularly. It is important to note that one must not miss out on paying for it. You might have paid for your premiums for years now but if you miss one deadline (including the grace period), that could mean that you will lose your insurance forever and the money that you have paid for in the past goes down the drain. In short, failing to pay for your insurance period will cost you a lot of money.

If you are talking to an insurance agent and you are worried because you think that the premium is too high, do not fret. You can always negotiate with the price. This could mean that some benefits will be removed from the package but at the end of the day, the important thing is that you have the policy that fits your lifestyle, your needs and the budget that you have.

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