Did You Know – The meaning of the term Premium

Tegner Miller Did You KnowIn today’s Did YOU know we will cover the term “Premium”

When you were a kid, you likely thought about the perks of being an adult: your own job, your own house, your own car, your own money. Probably the last thing you considered was your own insurance policy.

Whether you are buying your first insurance policy or have purchased many policies, you might wonder about the many terms or phrases frequently used in connection with your insurance that sound foreign to you, the consumer.

Don’t stress out.  TMIB has licensed professionals who are ready to help you with all of your insurance questions and needs and can explain the meaning of possibly confusing terminology.

    • Premium: A premium, also known as a rate, is the amount you pay annually for your insurance policy. Premium payments are typically made incrementally or as a lump sum each year depending on your policy.  While the concept of a premium might sound basic, the ways by which premiums are calculated are extremely complex. Your premium will be based on factors such as your age, lifestyle, and even the type of car you drive.

Below are some interesting factors that affect premiums for life insurance, auto insurance, and homeowner’s insurance.

    • Deadliest Catch: According to a September 2012 CNN report, the most dangerous job in America is that of a fisherman. While a seemingly low .12% of fishermen are killed on the job every year, this job is exceedingly dangerous compared to more mundane careers (like insurance broker). So, if you make your living catching fish on the high seas, your life insurance premiums will be significantly higher than for those who work on solid ground. Other factors that will also increase your life insurance premiums include lifestyle choices such as smoking. So, if you are a fisherman who smokes three packs a day… oh boy.
    • Mustang or Minivan?: As a young professional, you might want to show off your recent independence with a flashy (or at least fast) car. As a young person with a sports car, insurance companies see you as a driver who is at a higher risk of causing an at-fault accident.  All other things equal, a 20-something driving a sports car will have higher premiums than a 40-something driving a minivan.
    • The Dreaded Trampoline: Many of us have fond childhood memories of trampolines: trying to execute that perfect flip, bouncing at just the right time to send your sibling flying into the air, accidentally jumping off the side and getting hurt … Yes, while they are fun, trampolines are also dangerous. So dangerous, in fact, that insurance companies pay out around $280 million a year on trampoline-related injuries. This danger factor will be reflected in your homeowner’s premiums. If you are a trampoline owner, expect higher premiums.

Our experienced brokers at TMIB will work with you to get you the lowest possible premiums for your needs. Even if you are a 25-year-old fisherman who drives a sports car and enjoys smoking while jumping on his trampoline.  Call us at 310-828-9662 with any insurance questions.

The information provided in our blogs are very brief overviews that do not provide complete descriptions of any coverage described nor do they list all of the important factors one should evaluate before deciding on a policy. Please speak to your broker at TMIB about your specific insurance needs and for more detailed information about types of coverage.