What Does Mode of Premium Mean?
Mode of premium is the schedule of payments for insurance. The insured decides on the schedule upon purchasing a policy. The most common are annual, semi-annual, quarterly and monthly. The insured is billed according to this schedule, and some insurers allow the insured to change the schedule.
Insuranceopedia Explains Mode of Premium
Mode of premium is different from mode of payment. The former is how often one pays for insurance in a year. The latter is the method by which he or she wishes to pay, such as by cash or check. The insured might pay once a year, twice a year, or once every month. It may depend on income or the availability of the funds.
Many insurance companies allow their clients to change their schedules. An annual payment can be turned into a quarterly or monthly mode. An annual payment tends to cost less than the more frequent ones because some expenses are eliminated, such as those for collection.