Premium

A premium is the price of insurance: the amount you pay, monthly, yearly or once, to keep your cover active. Many people paying premiums into one pot is what lets an insurer pay the few who make a claim.

What decides its size

A premium reflects risk: the more likely and larger a payout, the higher it is. For term insurance, your age and health drive it, which is why buying young and healthy locks in a low rate for the whole term. For health cover, age, the sum insured and the city matter; for motor cover, the vehicle’s value. Choices that make you share more of a claim, a deductible or a co-pay, lower the premium, because the insurer carries less.

Keep it active

A premium keeps the cover switched on, and only while it is paid. Miss it and, after a short grace period, the policy lapses and the cover stops, often at the worst possible moment. A pure term plan simply ends; a savings-type policy may hold a small surrender value. Auto-pay and reminders are worth setting up so a lapse never happens by accident.

Paying more is not better

A bigger premium does not mean better value. A cheap term plan can protect your family far more than an expensive bundled policy. What matters is buying the right cover for the need, then paying the lowest premium that secures it. See how insurance works.