To maintain any type of insurance coverage, the policy owner must pay insurance premiums. Mmany factors affect the price of premiums. Whether the premiums are to pay for health, car or life insurance, it must be priced to the risk for insurers to remain profitable.
Insurance premiums are the cost of insurance that an insurance company charges the applicant in order to provide coverage. By paying premiums, the applicant is providing considerations to the insurer in return for protection against a loss suffered by them or another party or entity. Premiums are determined by the level of risk an insurance company considers it will take on by granting a policy.
Insurance premiums can be paid in different ways. Policy owners can pay their insurance costs annually, semiannually, quarterly, monthly or biweekly. Premiums can be paid by check, cash, and credit or debit card. Payments can be submitted by mail, online, over the phone and in person. Insurance companies may charge fees for the mode of payment that requires frequent transactions (monthly, biweekly) and/or if the payment is not made automatically (over the phone, by mail).
Insurance companies consider several factors before issuing a premium amount to the applicant. Not all factors are the same across the board as some policies cover persons or property. Some of the factors that affect premium rates include a person's age, gender, job occupation, health status, geography and coverage amounts. For properties the factors may include the property value, neighborhood, location, building type and the amount of coverage.
Underwriters are one of the most important positions within an insurance company as they analyze all the factors concerning premiums. This position determines which applicants are refused or granted coverage, and the amount of the premiums. The underwriters are vital to the success and failure of the insurance company. If their decisions lead to issuing premiums to people who are not good risks, the company can face a lot of payouts. If the premiums are too much, they can deter a lot of customers and lose a lot of business.
Depending on the information provided on the application, the premium rates charged by an insurance company can be higher than their standard rates. They may also include riders into the policy, which means that coverage will not be extended to specific risks. However, if the insurers determine that the risk of providing coverage is too great, then a policy can be denied altogether.