What Does Renewal Premium Mean?
A renewal premium is the premium on a policy upon its renewal. By paying an insurance company money with the intention of continuing the benefits of the insurance contract after coverage ends or modifying the terms of an insurance policy, such as adding a beneficiary or increasing the amount of coverage, a policyholder seeks a renewal premium. The insurance company may subsequently change the premium after reviewing the status of the policyholder upon such a renewal.
Insuranceopedia Explains Renewal Premium
Most insurance policies are effective until a certain date. Past this date, they have to be renewed to remain effective. The latter simply means that the policyholder is entitled to the benefits and the coverage as stated in the terms of the insurance contract. Upon renewal, the premium might change. Some companies do not change the price of the premiums if no claims were made during the policy period. Some also do not change the price upon renewal as an incentive for the insured to remain a client. Nevertheless, the premium generally increases if the policyholder modifies and expands the features of a policy, such as the addition of other benefits and coverage options. And as for life insurance, prices tend to get higher upon renewal because of a person's increasing age and higher likelihood of death.