A GUIDE TO CRITICAL ILLNESS INSURANCE
18
When you purchase coverage, you promise to make a payment – the premium. This is
your contract with your insurance company. Generally, premiums can be paid monthly or
annually and for a defined period as stated in your policy.
Premium options
For critical illness insurance, there are usually three different types of premium rate
options.
Paying for your coverage
There are usually two options offered for paying premiums on a critical illness insurance
policy - annual or monthly. Paying monthly may include a small additional charge.
7
Level premium: The premiums set on a level premium rate remain the same over
the insurance coverage period. Level premium plans may be for a limited period or
lifetime. For example, the premium schedule for a typical level premium critical illness
insurance policy may hold the premiums "level" up to age 75 or for the insured's
lifetime.
Renewable premium: A renewable premium rate will have scheduled increases built
in at specified periods of time, for example, every 10 years, over the coverage period.
Renewable premiums will initially be lower than the level premium on an otherwise
similar critical illness insurance plan but will become more expensive over time. A
renewable premium policy usually provides coverage for a limited time. For example,
a renewable premium critical illness insurance policy could have a premium schedule
which increases premiums every 10 years and provides insurance coverage up to age
75.
Yearly renewable: This design is typically something you will see in group or employer
offered plans. With this option your premiums are reviewed and can change each year.
•
•
•
PREMIUMS: TYPES
AND PAYMENT
