Premium

A premium is the regular payment made to an insurance company in exchange for coverage under a term life or final expense insurance policy.

What is a Premium?

A premium is the amount an individual pays periodically, typically monthly, quarterly, or annually, to maintain their insurance coverage. In the context of term life insurance, a premium ensures that the policy remains active, providing the agreed-upon death benefit to beneficiaries if the policyholder passes away within the term. Similarly, in final expense insurance, premiums are paid to secure funds for funeral and end-of-life expenses.

Premium amounts are determined based on several factors, including the policyholder’s age, health, lifestyle, and the amount of coverage they select. Term life insurance premiums are usually lower than those for permanent policies, given the limited term period and absence of a cash value component. In contrast, final expense insurance premiums tend to be more affordable due to typically smaller coverage amounts.

Consistent premium payments are essential, as failing to pay on time can result in the policy lapsing, which would leave the policyholder without the intended coverage. Many insurers offer flexible premium payment schedules to accommodate various financial needs, helping policyholders maintain their coverage without interruption.

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