What Is an Insurance Premium?
When it comes to insurance, there are a lot of terms and phrases that are important to understand. One of the most basic – and one you’ll encounter most often – is “premium.” You’ve probably heard of it, and if you have an active insurance policy with Farm Bureau Insurance of Tennessee or any other insurance carrier, you’re paying it. But what exactly is a premium, and how does it factor into your insurance coverage?
Let’s take a closer look at this common term.
What is a premium?
Put simply, your premium is the amount of money that you pay for your insurance coverage. This applies to every type of insurance policy, from auto or home, to life or business. Depending on your policy and the carrier, you might pay your premium monthly, quarterly, or annually – but monthly payments are the most common. Think of it like a subscription you pay to keep your insurance active, so that you’re covered for things like accidents, damage, or other unexpected events covered by your policy.
How do insurance premiums work?
Every policy is unique, and so is every premium. The cost of your premium depends on several factors, like the type of coverage, the value of what you’re insuring, and sometimes even your claims history. Your Farm Bureau Insurance of Tennessee agent can explain what affects your premium. It’s important to pay your premium on time, every time, or your insurance carrier may cancel your policy.
How do I find the right coverage with the right premium?
Some insurance policies offer lower monthly premiums but have higher deductibles – that’s the out-of-pocket money you pay before your insurance coverage kicks in after a covered claim – while others offer the reverse. Deciding what type of policy is right for you involves weighing what kind of coverage you need and what premium payment makes sense for your financial situation.
The bottom line? Your premium pays for coverage that can help keep you protected. Connect with a Farm Bureau Insurance of Tennessee agent to discuss your unique situation, so you can find the premium that suits your needs and your finances.
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