Insurance Premium is the amount of money that the an Individual or a Business pays to purchase an Insurance Policy and obtain Insurance Coverage. Insurance Premium is the income for the Insurance Company, and it guarantees protection against financial losses that occur because of covered events.
Insurance Premium is the income earned by the Insurance Company and in return the Insurance Company provides coverage to the Insured for losses against covered events. In case of an admissible claim, the Insurance Company has to provide reimbursement for losses to the Insured. Depending on the type of Policy, Premium can be paid on a monthly, quarterly, semi-annually or an annual basis. If the Insured fails to the pay the Premium on time, then the Insurance Policy can lapse and the Insured can be left without coverage.
There are many factors which determine the Insurance Premium to be paid for the Policy. Different types of Policies such as Motor Insurance, Health Insurance , Life Insurance will have different types of Premiums. The basic principle is that the Insurance Premiums are based on the expectation of loss and Actuaries use statistics to set Premiums for Insurance Policies. Depending on the type of Policy, the factors which determine the premium will vary. For example, the Premium for a Health Insurance Policy will depend on the Sum Insured and the features opted for while the Premium for a Motor Insurance Policy will depend on the Prior Claims Experience, Add-On Covers chosen etc. For Commercial Insurances like a Fire Insurance Policy , the Insurance Premium depends on the Sum Insured, Riskiness of the Industry and Prior Claims Experience while for Liability Insurances, Insurance Companies generally need to know the Size and Revenue of the Company, Prior Claims Experience, Riskiness of the Industry to decide Insurance Premiums.
Insurance Premiums vary from Insurance Company to Insurance Company. There are some measures that Policyholders can undertake to reduce Insurance Premiums as listed below:
© 2025 Unified Capital Trio Advisory | All Rights Reserved. Website Designed by : Ink Web Solutions