The premium is the money you pay to buy the life insurance policy as well as continue it. In other words, premium is the cost of insurance or the consideration in the legal contract of insurance.
If you do not pay premiums on time, the insurer has the right to deny insurance benefit or opt out of the legal agreement.
Premium cost varies from policy to policy and person to person due to several factors. Some of the factors that affect the premium are as follows:
(Life and health insurance only) The older you are the more becomes the risk of you dying or contracting a disease. Thus you are likely to pay more premiums as you age.
(Life and health insurance only) Though not necessary, but women attract a lower premium than men as they have a higher life expectancy.
The longer the period of the policy, the higher will be the premium as the probability of paying your claims increases.
If you are healthy and are not suffering from any diseases, then you are likely to pay less premium than a person who has certain health problems. Obesity, heart problems can attract higher premiums.
If you pay your premium monthly then the value of premiums paid will be higher than the premiums paid yearly.
This is the way you live your life. This also plays a major role in influencing your premium. Habits like smoking and drinking can attract a higher premium rate.
Several high-risk jobs such as working in a chemical factory, working in mines, being a Pilot can considerably increase your premium as these involve undertaking dangerous activities which increase the chances of your death.
When you buy a life insurance plan, the insurance company provides you with multiple options to pay your premium. You can either pay regularly or in a lump sum.