Premiums and Premium Modes 2_2.pptx

By cbrowninsurancebroker | Updated: Aug. 31, 2024, 9:17 a.m.

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This lesson is intended to familiarize the student with what a Life Insurance Premium is and explain the premium modes. This lesson also informs the student of things about premiums and premium modes that are good to consider when making a choice of Premium Mode. After completing this lesson the student should be able to make a premium mode selection when choosing a Life Insurance product.

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Lesson 2_2: Premiums and Premium Modes
July 2023
Objective
This lesson is intended to familiarize the student with what a Life Insurance Premium is and explain the premium modes. This lesson also informs the student of things about premiums and premium modes that are good to consider when making a choice of Premium Mode. After completing this lesson the student should be able to make a premium mode selection when choosing a Life Insurance product. 
Premiums and Premium Modes
Monthly
12 payments in one plan year each payment may come with its own fee or a fee for all premiums paid associated with the amount of the payment. 
Quarterly
consists of one payment every three months. This will be 4 payments in a plan year.
Semi-Annually
consists of 1 payment every 6 months. This will be 2 payments in a plan year. 
Annually
Consist of 1 payment in the plan year.
SPWL
Consists of 1 payment every 6 months. This would be 2 payments in a plan year
Single Premium Whole Life Insurance is set that the initial premium is the amount of the entire amount of premium needed for the coverage received. 
Premiums and Premium Modes
Premiums are the amount of money necessary for the coverage. The premium can be paid in multiple ways called premium modes. This is something that is written in the contract and can be amended later with some carriers. The Premium Modes are when the Premium is to be paid by the owner. The owner has the choice of paying monthly, quarterly, semi-annually, or annually. 
Good to Know When Choosing
The one thing that is overlooked and can be of value to know when choosing a premium mode is that each payment can have fees associated with them thus the least amount of payments (annually) would mean the consumer is paying the least for the same coverage that someone pays monthly dues. 
There is one other way to save and the consumer can also receive guaranteed coverage with instant Cash Value accumulations. Single Premium Whole Life is an option that includes a single premium payment. When a consumer chooses this option they receive additional guarantees on the contract for endowing the policy. All contracts have an amount of premium required for coverage and in this situation, that amount is paid in the one-time initial payment.
Good to Know When Choosing
Good to Know When Choosing
Many with retirement products or brokerage accounts use this method to obtain coverage given the tax benefits and mostly the ability to get coverage while continuing to maintain some access to those funds. Basically having their savings work for them. Single Premium Whole Life is not a premium mode but a product that has one premium mode however the Whole Life Insurance product is largely the same as a Whole Life Premium paid at any other mode of payment. However, there are certain aspects of the contract that are immediately available because all of the premium required is paid in full. 
Good to Know When Choosing
There is one other way to save and the owner can also receive guaranteed coverage with instant Cash Value accumulations. Single Premium Whole Life is an option that includes a single premium payment. When a consumer chooses this option they receive additional guarantees on the contract for endowing the policy. All contracts have an amount of premium required for coverage and in this situation, that amount is paid in the one-time initial payment.
Summary
Premiums is the part of the contract agreement that leans heavily on the responsibility of the consumer or owner of the policy. This makes it extremely important that the Premium Modes are understood fully so that the owner knows of all the options afforded to them per the program and Insurance Carrier. Knowing these modes not only allows the owner to save go about taking care of their responsibility but it also allows the owner to save money and protect themselves from liabilities. Knowing all of the ways to pay for an insurance policy will help to use money that is being saved or invested to take care of needs while saving yourself money in taxes paid and fee endured.

Premiums and Premium Modes 2_2.pptx

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