Do you know the cost of your next insurance premium payment? If you have a policy with adjustable premiums, the payment may change on a monthly basis. These policies feature variable premium rates that can change based on several factors, as outlined in the established policy agreement.
How do adjustable premiums work?
The policy outlines the limits of the allowed premium changes, which may occur annually or at other specified intervals. Premiums may change for a multitude of reasons, including not limited to:
- Administrative/operational costs: If the insurer’s overhead costs increase, the costs may be passed on to the policyholders.
- Coverage changes: Costs may increase or decrease based on changes made to the policy.
- Economic conditions: Inflation and weak markets may drive premium costs up, while strong markets may reduce costs. This can be true of investment-based policies.
- Policyholder age/health: Some policies may allow for risk assessments to influence premium costs as the policyholder ages or receives new health information.
- Regulatory changes: Tax and legislative changes may result in new fees that call for adjustments in the premium.
What types of insurance policies might have variable premium rates?
Flexible premiums aren’t used in all types of insurance policies. These plans are generally limited to:
- Universal life insurance.
- Variable life insurance.
- Group insurance.
- Health insurance.
It is possible your auto insurance coverage costs may change when your policy renews. Due to factors such as driving history, location, and insurer pricing models. However, since the price stays the same throughout the term, these premiums aren't considered adjustable.
Let Infinity Insurance Agency, Inc. help you find your next policy
IIA works with over 20 different auto insurance carriers to help you find a plan that suits your unique needs. Our experienced and fully Spanish bilingual agents can explain multiple coverage options. Call 1-855-478-3705 or get a free quote online to get started!