UK Accounting Glossary
An insurance premium is simply an amount of money paid for insurance coverage. An insurance premium is an intrinsic part of a contract between a policy holder and an insurance company. Thus, as long as the policyholder continues to make insurance premium payments, the insurer must guarantee adequate protection. Insurance premium may vary depending on the policy purchased. For instance, perspective insurance buyers may choose level-premium insurance for its flat insurance premium throughout the duration of the plan. Adjustable life insurance, on the other hand, offers policy owners flexible insurance premium plans. Depending on a type of insurance purchased, there may be a number of other factors affecting the insurance premium. Hence, for example, life insurance premium payments are also dependent on the individual’s age, health, and lifestyle. By the same token, insurance premium costs of policies that indemnify property may be determined by market value and condition.
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This glossary post was last updated: 9th February 2020.