What is Insurance Premium?
How much premium we have to pay?
The amount of insurance premium to be paid depends on certain criteria like type of insurance, insurance plan, age, health, the area where someone lives…
Consider, a 20 year old applying insurance for a sports car and 40 year old applying for a mid class sedan. Both may be good drivers but, the insurance company charges higher premium for the 20 year boy citing faster driving in sports car and greater risk of accidents. Similarly a person who smokes pay higher health insurance premium than who doesn’t smoke and an earth quake prone region attract higher house insurance premiums.
Insurance premium rates also increase for a number of reasons like inflation, health conditions, area of person working. Say a student applied for health insurance now working in industrial area then the insurance company increases the premium rate.
Insurance premium has to be paid regularly, if the policy holder fails to make regular payments he will be penalised or in extreme cases his policy will be revoked.