Life Insurance Premium
Anybody applying for a life insurance policy will first be quoted a life insurance premium. This premium is the amount of money the insured individual will be required to pay on a regular basis for the insurance policy to continue running.
Most life insurance premiums are calculated using the following information:
- The amount of coverage required
- The number of years the policy is to run for
- The additional benefits that are to be included
Some companies also take into account the health of the individual to be insured. This is especially true when calculating a term life insurance premium. For example, a fit and healthy individual will often be quoted a lower premium cost than a person who smokes, is overweight or who has an ongoing medical problem – simply because, statistically speaking, a healthy person is less likely to die during the terms of the policy.
Depending on what type of insurance policy is needed, a medical exam may also be required. Although this process can be tedious it can also reduce an insurance life premium by up to 40 percent, so it is well worth completing if offered.
Term life insurance premiums have one of two fates:
- They are kept by the insurance provider at the end of the policy
- They are returned in whole or in part to the insured providing there have been no claims made on the policy
Most insurance policies today are of the first type. However, there is a growing number of insurance providers who are now starting to offer a life insurance premium return policy option. As mentioned above, this new type of policy allows the insured individual to claim back a percentage of their premium payments at the end of the policy terms. The premiums themselves may be higher than with a general no-return policy though and this is worth keeping in mind.
The amount of a life insurance premium can be affected by many factors, the most obvious of which is the amount of coverage that will paid on death. Other factors include the length of time the policy is to run for, the overall health of the individual and surprisingly the state in which the individual lives. Some of these factors can be controlled whereas others can’t and so it may be a case of balancing the amount of coverage with the cost of the premiums to ensure the best policy available.