What is premium economy on Lufthansa

The use of the English term premium is notable.  Premium generally means an additional payment. When a share is sold at a higher price than its own value, it is called a share issued at premium. But in the case of insurance, the term premium is used to mean the money paid by the insured to the insurer.  In fact, the premium is the exchange value of the risk taken by the insurance company. That is, the premium is the amount paid by the insured against the guarantee that the insurer bears the risk or pays in the insurance contract.

In general insurance premiums are usually paid once but in life insurance it is usually paid from time to time. That is why it is also called installment. The Oxford English Dictionary states that a premium is an amount of money that is regularly paid for insurance.

P. H. Collin says,

From the above discussion the following idea about premium can be gained.

1. This is the exchange rate of the risk borne by the insurer

2. Such money is paid by the insured to the insurer

3. The insurer receives such money in a promise to bear the risk of the insured and

4. It may be paid in one lump sum or in installments as per the terms of the contract.

1. Net premium: Net premium is the amount of premium collected from an insured or the premium that the insurance company has no money to cover its own expenses after fulfilling the insurance claim. The main goal in determining this is to determine the minimum premium rate. In this case, of course, the minimum amount of the same age is taken as the number of potential insured in a particular term policy, not as a matter of an insured.

2. Gross premium: When determining the amount of premium, the insurance company may incur various expenses with the insurance claim; When the medical examination fee, stamp cost, representative commission, renewal commission, office and management related expenses etc. as well as the expected profit of the organisation are added then that premium is called total premium. In the case of a for-profit policy, the amount of profit that is possible is also added to it.

In the world of competitive insurance business, the success of Life B organisation depends on accurately determining the number and rate of installments. In each case, the amount of risk should be properly determined, as well as the rate of premium and the number of installments should be determined in such a way that it is within the affordability of the insured. So in this case different conditions or elements have to be considered. It is discussed below:

1. Proposed insured sum: The rate of premium depends on the particular insured sum or the insurance claim. If the amount of such insured is higher then the rate of premium is naturally higher. The lower the amount, the lower the premium rate.

2. Time-period of insurance policy: The rate of insurance premium also depends on the term of the policy.  If all goes well, the premium rate is lower if the term of the policy is longer. And if the term of insurance is shorter, then the rate of premium is higher.

3. Nature of risk: In determining the insurance premium, the type of risk needs to be taken into special consideration. If the amount of risk is high then naturally the rate of premium is high and if the amount of risk is low then naturally the rate of premium is low. Here are the things to consider:

i. Age of the insured: It is generally believed that a 50 year old adult has a higher risk of death than a 20 year old youth. Therefore, the age of the person whose life is being insured is a very important consideration in determining the insurance premium and installment. The lower the age, the lower the premium rate, otherwise the premier rate is higher.

ii. Profession: Not all professions are equally risky.  Occupations that are more prone to occupational diseases, where the risk of accidents is high, naturally increase the amount of risk. As a result, the premium rate is higher.  Where the profession is much safer, the lower the risk, the lower the premium rate.

iii. Physical condition: If the health condition of the insured person is bad, if the body is weak, then the risk amount of the insurance company is naturally higher. As a result, the premiere is higher. On the other hand, if the health of the insured person is good, the physical constitution is good and strong, then the rate of premium may be less.

iv. Character and habit: Character and habit of an individual is an important consideration in determining the premium in life insurance. If one's character is bad or has bad habits, the risk of accident and death increases. On the other hand, in the case of a person with good character, the level of risk is naturally low.

v. Family history: The family history of the insured person is also taken into consideration in determining the risk in life insurance. If the lifespan of the previous offspring is short, if the hereditary disease continues, then naturally the amount of risk is high. On the other hand, if such history is favourable for the insured, the rate of premium is fixed less considering the risk.

vi. Residence: If the place of residence of the insured person is in a safe and healthy place, then naturally the risk of accidents and diseases will be less. On the other hand, if the accommodation is in a risky, dirty and crowded environment, the risk of accidents and diseases is high. As a result, the amount of premium may be higher.

vii. Financial ability: A person's financial ability also plays a role in increasing the risk of death and determining the premium. If the financial capacity is good then the person can take nutritious food. Can receive necessary medical benefits if ill. This reduces the risk of death. But less able people do not get all these benefits. As a result, the level of risk increases.

viii. Education and standard of living: The level of risk also depends on the quality of education and standard of living of the insured person. If the insured person is educated and health conscious, if the standard of living is improved then the amount of life risk is less. On the other hand, when a person is uneducated and unaware and the standard of living is underdeveloped, the amount of risk naturally increases. It is to be noted that the level of risk and the rate of premium are determined by considering some of the above factors individually or collectively depending on the situation.

4. Nature of insurance policy: The rate of premium also depends on the type of insurance policy. The rate of premium on life insurance is lower than that of term insurance. The rate of premium is usually much higher in insurance policies with dual, triple or multipurpose purpose than ordinary term insurance policy.  The premium rate is naturally higher in non-profit insurance policies than in non-profit ones.

5. Investment facilities: The insurance company invests the money received as premium in various profitable sectors. Profits from such investments or interest from loans are considered an important source of income for the insurance company. If such investment facility in the country is favourable for the insurance company, then the insurance company can do good business even with low premium. Such benefits are not good. If there is, it is supplied naturally by increasing the rate of premium.

6. Management expenses: The management of the organisation also has an influence in determining the rate of premium. If the cost of management is high, then the company has to increase the premium rate in the interest of making a profit by covering that cost. On the other hand, if the management cost of the organisation is low, it is possible to run the business by keeping the rate of premium low.

In conclusion, since insurance is not a gamble;  Therefore, in determining the rate of premium, all the necessary components must be reasonably analyzed. Therefore, determining the premium rate by considering the above factors can be profitable for the business.