How Do You Spell LEVEL PREMIUM?
Pronunciation: [lˈɛvə͡l pɹˈiːmi͡əm] (IPA) 
Pronunciation: [lˈɛvə͡l pɹˈiːmi͡əm] (IPA)
Level premium refers to a fixed or unchanging amount of premium paid for an insurance policy over a specific period, usually the entire term of the policy. In other words, it is a consistent and uniform premium payment that does not increase or decrease throughout the policy's duration. This type of premium structure is commonly associated with life insurance and some types of health insurance policies.
The level premium is calculated by the insurer based on various factors, including the insured individual's age, health condition, gender, and the coverage amount desired. Once the premium is determined at the inception of the policy, it remains constant regardless of any changes in the insured's circumstances or the rising costs of the insurer's expenses.
The advantage of a level premium is that it provides predictability and stability for the policyholder. By having a consistent premium amount, it allows individuals to plan their finances and budget accordingly, knowing that the premium amount will not fluctuate over time. This can be particularly beneficial for long-term insurance policies, such as whole life or permanent life insurance, as it ensures affordability and avoids potential financial strain that could arise from increasing premiums.
It is important to note that while the premium amount remains level, the coverage and benefits provided by the policy usually remain unchanged as well. However, some policies may include provisions for premium increases over time if specifically stated in the policy contract.
A p. which remains the same so long as the policy continues in force.
A practical medical dictionary. By Stedman, Thomas Lathrop. Published 1920.
The word "level" in the term "level premium" comes from the Latin word "libra" meaning "balance" or "even", which evolved into the Old French word "livellus" meaning "balance scale". In English, "level" referred to something that is flat, even, or balanced.
The term "premium" originated from the Latin word "praemium", meaning "reward" or "profit". In the context of insurance, it referred to the amount of money paid by an individual to an insurance company in exchange for coverage or benefits.
When combined, "level premium" refers to a type of premium payment structure in insurance where the premium amount remains constant or level throughout the term of the policy. It denotes a balanced, consistent, and unchanging premium over a specified period of time.
