Premium

A premium is the amount of money a policyholder pays to the insurance company to maintain coverage. Premiums can be paid monthly, quarterly, annually, or in a lump sum. Depending on the policy type, a portion of the premium may go toward the cost of insurance, cash value accumulation, and fees.

Additional Notes

Types of Premiums:

• Level Premium: Remains fixed throughout the life of the policy.
• Flexible Premium: Allows the policyholder to adjust payments (common in Universal Life).
• Modified Premium: Starts low and increases after a set period.
• Single Premium: One-time upfront payment (often used in MECs).

Pro Tip Block

💡 Pro Tip: For policies designed to build cash value, paying more than the minimum premium — without triggering MEC status — can accelerate growth significantly.