Why are premiums paid in advance?

      

Why are premiums paid in advance?

  

Answers


Noah
Why are premiums paid in advance?
Premiums are paid in advance simply because some policyholders can lapse their contracts (i.e stop paying
their premiums), and might be very tempted to do so at the end of the first year, so
receiving one year’s insurance protection without paying any premiums at all! Some
policyholders will die in the first policy year, and the cost of paying the death benefits
could quickly create large losses and potentially insolvency for the insurer in this situation.
Kibet Koina answered the question on December 27, 2018 at 18:55


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