What is a life insurance premium?
Life insurance has been around for centuries. However, do not feel alone if you do not know how it works. Almost half of Americans do not know. In the century before the birth of Christ, Gaius Mariu a Roman general and statesman organized a burial club to pool money to give a deceased soldier a proper burial. Romans of the time believed unless a specific ritual was followed that a person’s soul could not rest.
Life insurance of today uses the same concept of pooling money from people that want to provide a cash benefit to whom they choose. The money that a person pays for the life insurance protection is called the life insurance premium. The dollar value of the benefit determines the amount of the life insurance premium that a person must pay. The cost is also affected by other risk factors like a person’s age, gender, state of health and lifestyle. Lifestyle is considered risky behaviors like hang gliding or dangerous occupations like skyscraper window washer. Some life insurance companies are now using big data to determine a person’s life insurance. As a result, for some life insurance, all a person must do to get coverage is answer a few questions. How a life insurance premium is calculated has changed dramatically over the centuries till now.
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