Life Insurance Premium
Life insurance premium refers to the specific amount periodically paid by the policyholder to avail insurance coverage of a life insurance policy and to keep the life insurance policy active. The premium amount is calculated by the insurance provider based on certain factors.
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What Is Life Insurance Premium?
Life insurance premium is the specific amount periodically paid by the policyholder during the premium payment term of the life insurance policy to be able to avail coverage benefits and to keep the life insurance policy in force. The life insurance premium is calculated by the insurance company based on certain factors such as age, gender, profession, health condition, lifestyle, personal habits etc. An applicant can also estimate the amount premiums he/she will be paying for their life insurance policy by using a life insurance premium calculator.
Insurance companies also appoint actuaries for the purpose of accurate analysis of a person’s life insurance premium calculation. The actuary analyzes the risk associated with a person's way of living, personal habits, medical condition etc.
How To Pay Life Insurance Premiums?
There are several premium payment options provided by the life insurance company premium payment. The policyholder can choose to pay premiums on a monthly, quarterly or health year basis, the policy can also choose to make a single premium payment. This is known as premium payment mode/frequency.
Premium payment frequency determines the premium payment term under which the policyholder makes the regular premium payment for a fixed period of time. The policyholder can choose to make the premium payment online or through offline methods which are demand draft, cash, cheque etc.
What Happens If You Fail To Pay Life Insurance Premiums?
In case the policyholder fails to pay a premium on the due date, it causes the life insurance policy to step into the grace period offered by the life insurance company. Grace period is additional period of time provided to the life assured for making premium payments after the due date. In case the life assured fails to pay the premium even during the grace period the life insurance policy will lapse causing the policy to discontinue.
Therefore, it is advised to make regular premium payments to avoid policy lapse and termination.
What Factors Impact Life Insurance Premiums?
Below listed are some factors that affect life insurance premium:
- Medical History
- Present Medical Condition
- Personal Habits (Consumption of alcohol/tobacco)
- Lifestyle Choices
- BMI (Body Mass Index)
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