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What Is an Insurance Premium?

An insurance premium refers to the amount of money that is stipulated by an insurance company that a insurance policy holder must pay in order to maintain the active coverage of the insurance.

For example, an insurance premium on your car insurance would be the amount you had to pay before the insurance company. This amount is often something around $500 or $1000. Because of the premium, there are some issues (such as a cracked windshield) that insurance doesn't cover because they are cheaper than the premium.

Insurance premiums asked by different insurance companies will vary even if these companies offer the same service. This is the reason why insurance experts recommend that people who are interested in getting an insurance policy get quotes from different insurance companies so that they can get the best deals and lowers insurance premiums. To get the insurance premium, an insurance agent will get a person’s personal information, and based on the information as well as other factors, the insurance premium is computed. The lowest insurance premium would obviously be the easiest policy to maintain, although a low insurance premium may also mean that the coverage provided may not be much. The insurance premium is based a lot on statistics. It is not really dependent on the individual habits of a person applying for insurance. This basically the same whether a person is applying for car insurance or a medical insurance.

Insurance premiums are usually collected in various schedules. One can opt to pay it monthly, quarterly, semi yearly or yearly. A policy holder has the responsibility to make sure the insurance premiums are paid regularly. A policy holder who fails to make the scheduled payment is in danger of having his insurance policy cancelled by the insurance company. This is called a lapsed policy. The policy holder has the option of paying the balance of the insurance premium to reinstate the policy.

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