What is Premiums in Insurance

The insurance premium is the disbursement that the beneficiary of the policy must make to the insurance company. This, in order to access the corresponding coverage.

The premium can be distributed in a single delivery of money or in several benefits and is payable from the signing of the contract.

It should be noted that the amount of the premium depends on the agreed compensation limit. Likewise, the nature of the risk to be covered has an influence. That is, the company must take into account the costs that it would incur in the event of a claim.

Types of insurance premiums

There are several types of insurance premiums. They stand out from them:

  • Single payment: When the insured must make a single disbursement, usually before the policy enters into force.
  • Periodic premium: Regular installments are scheduled, for example every year, during the duration of the coverage.
  • Fractional premium: It is when an annual premium is amortized in several contributions, each month or quarter, for example. If a claim occurs, the insurer can require its client to complete the year’s payments.
  • Ascending natural premium: It is recalculated from time to time, rising progressively along with the age of the beneficiary.

Consequences of not paying the insurance premium

The insured is exposed to serious consequences for failing to pay the premium. First, coverage may be suspended if a period elapses, for example 30 days, after the obligation expires.

However, this sanction can be avoided if the individual negotiates with the company, committing to pay his debt in a determined period.

In the most extreme cases of non-payment, the insurer can declare the resolution or termination of the contract. In this way, she will not be responsible for any accident that happens in the future.

It is worth mentioning that before the coverage is suspended, the company will most likely contact its client. This, in order to inform you about the Consequences of not paying the insurance premium.