Premium payment ​
Definition ​
The premium is the amount paid by the policyholder to an insurance company in consideration for the coverage of a risk assessed under the insurance policy.
Premium payments may be made by bank transfer, direct debit, or cheque (exceptionally).
The policy specifies a minimum amount of premiums to be paid. The policy is not valid if the minimum premium amount is not reached.
Two types of premiums coexist: single premiums and regular premiums.
Initial Single Premium ​
A premium payment made at the inception of the policy. Single premiums are non-recurring and do not create any obligation for future payments.
Additional Single Premium (or Top-Up) ​
A non-recurring premium payment made after the policy has been issued, in addition to the initial single premium.
Additional single premiums increase the value of the policy without modifying the premium structure.
The policy specifies a minimum amount for premium payments.
Fixed Regular Premiums ​
A recurring premium payment made according to a predefined frequency. Regular premiums may be paid automatically and may be modified, suspended or stopped.
The amount and frequency of premium payments are defined in the policy.
In the event of non-payment of premiums within 10 days following the due date, the insurer will send the policyholder a registered letter with acknowledgement of receipt.
If payment is not made within 40 days following the sending of this letter, the insurer may:
- either terminate the policy in the absence or insufficiency of surrender value,
- or maintain the policy with reduced benefits. However, this option is only available after two years of premium payments or if at least 15% of the total premiums have already been paid.
Synonym of Regular Premium:
- Periodic Premium
- Recurring Premium
- Scheduled Premium