What Are Life Insurance Premiums?

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Life insurance premiums are the amount you pay each month, bi-annually, annually or once every few years to keep your policy in force. You can choose the payment cycle, which greatly depends on your budget and how much you can pay upfront. Failing to make a premium payment could cause your policy to lapse, especially if you miss paying by the end of the grace period. Premiums sometime help grow the cash value of a permanent type of life insurance.

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Premiums for term life insurance are the lowest because a term life insurance policy does not build a cash value. Your beneficiary is paid out an agreed-upon amount if you die within the specified term you have coverage. Whole life insurance premiums are more expensive than term life premiums because they build cash value as long as you pay your premiums on time. Universal and variable universal life insurance premiums are more flexible as long as the cost of insurance is covered. Excess premiums for variable universal life insurance policies create a cash value reserve that grows over time.

In some cases, premium payments may stop early if you were paying more than the minimum amount over time.

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