Premiums
A 'premium' is the amount that you must pay each month (or sometimes each year) to your life insurance provider in exchange for financial protection. If you are unable to pay the premiums your policy may become void: you will no longer be covered in the event of death or terminal illness, you cannot claim any cash sum and you will receive no refund of the payments you made. You may wish to consider premium protection, which acts as a kind of insurance in the event that you are unable to make the necessary premium payments. The cost of these premiums is determined by a range of factors, including:
- Your health
- The amount of cover you require
- The length of the insurance policy
- Your age
- Your sex
- Your occupation
- Your lifestyle, including whether or not you are a smoker
If you suffer from poor health or have a family history of a particular condition, your life insurance premiums will generally be higher because you present a greater risk to the insurance company. Similarly, your premiums will tend to increase as you get older, because the risk to the insurance company that they will be required to pay out to your survivors increases. Typically women live longer than men, and so men tend to pay higher premiums than women of the same age.
Some providers offer customers the chance to pay premiums at a fixed rate for a certain period of time. Fixed premiums are also known as 'guaranteed premiums'. As most premiums are only guaranteed for a fixed period they will usually increase after this time, often in line with published insurance age bands (which increase the price according to your age) or by an annual rate (which increases the price by a certain percentage each year).
For more information, see also:
