An insurance premium is what an insurance policyholder pays the insurance company in exchange for coverage. The amount that an individual has to pay as insurance premium depends on the actual terms of the policy and several other factors. The insurance premium can be paid monthly, quarterly, or yearly, depending on the agreement.
Insurance premiums are calculated by insurance companies based on existing statistics. In order to calculate the amount of an insurance premium for a particular individual, several factors are taken into consideration. First, there is the amount of coverage that the individual desires. This will play a large role in determining how high or low the premium is. More so, statistics such as the likelihood of accidents, health problems, and so on are taken into consideration as well. This is calculated given the gender, age, etc. of the insured.
It is important to pay insurance premiums following the agreed upon schedule. If an insurance policyholder fails to make one payment, the insurance company may decide to cancel the insurance policy. In some cases, there are grace periods allowed for payment. It is thus vital that you know about these grace periods as you may throw away a lot of money if you miss a single payment. In other cases, insurance companies will allow policyholders to make up for the missed payment, pay a corresponding fee, and the insurance policy will then be reinstated. These details are included in the policy upon signing, so it is wise to read the small print at the outset.