What Is An Insurance Premium?

Insurance premium is an amount of money that is paid to the insurance companies by the policy holder. This payment should be paid till the maturity period of specific insurance policy. The insurance premium can vary from company to company. If the risk perception is more about the person, the insurance premium will increase. For example the cost of premium is more for the smoker than the non-smoker. The risk perception is more for the smoker than the non-smoker.

The level premium insurance means the premium remains the same through the duration of the contract. The insurance companies use different factors while determining the premiums for specific policy.

• Credit score: The credit score decreases or increases the insurance premium.
• Age: For automobile and homeowner policies, age is the factor for insurance companies for determining the insurance premium.
• Coverage: The premium of insurance should be determined based on the amount of coverage on the policy. The coverage amount will be varying based on type of policy.
• Deductible: The deductible is the amount of money that the insured person pays to the insurance companies before benefits are paid on policy.
• Driving history: In auto insurance policy, the driving history of the insured person determines the insurance premium.

The above mentioned are some of the important factors in determining the insurance premium in auto insurance, home insurance and life insurance policies.