What Is an Insurance Premium?
If you have an insurance policy, you’ve likely heard the terms premiums, policy limits, and deductibles used frequently enough, but you may also be confused about which is which. And if you are, you should know that you’re not alone. Better understanding the terms related to your insurance helps to ensure that you have the coverage you need. If you do have questions or concerns about your current coverage, seek skilled guidance from a well-respected Michigan insurance agency today.
The Basics
Before we dive into the matter of your insurance deductible, let’s take a look at the basic insurance terms, which include:
- Your insurance premium refers to the amount you pay on a regular basis to keep the policy in force.
- Your insurance deductible refers to the amount you’re required to pay out of your own pocket per covered claim.
- Your insurance limit – or your policy limit – refers to the maximum amount your insurance provider will pay on a covered claim.
The insurance deductibles and policy limits you choose play an important role in the calculation of your insurance premium.
Your Insurance Premium
You regularly pay insurance premiums on your insurance policies in order to keep them in effect. You might make these payments annually, every six months, quarterly, or monthly – depending on the insurance company and the payment system you set up. Many insurers provide a small break on the cost when policyholders make fewer payments, such as annually or every six months. Failing to cover your policy premiums can lead to cancellation of the policy, which leaves you without protection.
How Your Home Insurance Premiums Are Calculated
A range of factors can affect the amount of your home insurance premiums, including:
- The age and overall condition of your home
- The coverage limits and deductibles you choose
- Any optional coverage you elect to purchase
- Your history of claims in the past
- Your credit rating
- The local fire protection that applies
- Discounts for things like security cameras and alarms, deadbolts, and policy bundling
Your premium will reflect the level of coverage you carry, and striking the right balance between adequate coverage and a premium you can afford is key.
How Your Life Insurance Premiums Are Calculated
Your life insurance premiums are based on factors like the following:
- Your age, overall health, and life expectancy
- The amount of coverage you purchase
- The kind of policy you purchase and its duration – for term policies
The life insurance you purchase is part of your overall estate plan. Because your policy allows you to continue supporting your loved ones in your absence, finding one that addresses your unique concerns is critical.
A Seasoned Michigan Insurance Provider Can Help
At Hartman Insurance – proudly serving the Saline and Ann Arbor area – we take the time and care to get to know your insurance needs, to help you better understand what’s available, and to help you find the policies that work for you. We’re on your side, so please don’t wait to contact or call us at 734-245-2678 for more information today.