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The Importance Of Insurance Rates And Premiums:

Jan 8, 2008
Insurance rates determine the amount of premium you need to pay for your insurance coverage. When considering an insurance policy always keep in mind that premium is not the only factor when selecting one. What really important is the quality of the insurance policy and the claims, these are sometimes more important than the insurance rates itself.

Best insurance rates are the one that can be easily assessed by the insurer and the value it will provide on covering costs for paying is case of any claim. This is the job of the parties, the insurer and the insured. The policy provider is to pay for any claims through the premiums collected and these should be enough to cover all the claims. If the claim exceeds the premium charged than it will not be paid and if you are the one who is claiming than sorry for you.

Let us look at car insurance to understand the concept further. When determining the premium for a car insurance there are many factors that are taken into consideration. These factors include the speed of the car, the age of the driver, history of driving capability of the driver, model of car as well as the amount of cash that is needed in case there is an accident.

Life insurance rates are based upon a combination of age, sex, and lifestyle. The older you are the more likely you are to die in any given period when compared to someone younger. Men die before women as a general rule, while if you engage in high risk activities such as smoking, this too will increase your probability of dying sooner and therefore while the insurance policy is in force. The insurance company will therefore charge a higher premium as appropriate under the circumstances.

Whenever you apply for a policy the first thing that the insurer will do is try to determine the level of risk associated with you. Therefore, it is very important that you answer all the questions honestly. In case you fail to do so the insurance company has the right to deny your claim.

Sometimes the risk to the insurance company can also be very high. It can be so great that they will not put up an insurance rate. Sometimes the risks are limited to specific circumstances or activities. Some companies will specify the risks that will be covered in the insurance policy but they will exclude certain habits of yours that can lead to your death. You should understand these circumstances before accepting an insurance policy.

Remember that insurance rates determine premiums and so how much you will be charged. This does not mean that a cheap premium is the best deal. Cheap premiums may mean inferior insurance cover or conceal a poor claims payout record. Ask yourself how you would feel if you paid a cheap premium only to find that your car was not in fact insured for a particular type of accident? Expect to pay for good quality cover, but the insurance market is extremely competitive so it pays to shop around too.

It is very likely that different companies give you different quotes for insurance rates for the same policy. The main reason for this is that each company puts different value on each customer and the policy for which he has applied. This also depends on the financial situation of the company as well. Getting a cheap policy might mean your getting a bad policy. Similarly it is not necessary that high premiums will provide you with what you expect. Therefore, it is always wise to shop around and compare insurance rates for the best insurance rates and coverage provided by the company to get the best possible deal.
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