What is an insurance premium?
Find out what an insurance premium is and how it can lower the overall costs of your insurance.
7 ways to take control of your financial future
Sponsored By
World Financial Group
An insurance premium is the price of an insurance policy, typically paid monthly or annually. Insurance companies in Canada consider a wide variety of factors when setting premiums, and they can vary significantly between companies. So it pays to shop around.
For home insurance, pricing is based on factors including the size, age and location of your home, as well as other things like your claims history and maintenance. If you own a swimming pool or operate a home-based business, your premium will usually be higher, because the insurance company views you as a higher risk.
Similarly, premiums for auto insurance are usually higher for expensive vehicles or drivers with a history of accidents or traffic tickets. Insurers may offer lower premiums as incentives to encourage lower-risk behaviour—a discount for installing winter tires, for example.
Life insurance premiums are also based on risk, including factors such as your current health, family history, age, sex, whether or not you smoke, and more.
Example: “Ezra installed a sump pump in his home, and his insurance company lowered his home insurance premium to reflect the reduced risk of water damage to his house.”
Read more about insurance:
- Buying home insurance in Canada: a beginner’s guide
We rounded up everything you could want to know about your home insurance coverage. - How much life insurance do I need?
Here’s how to figure out how much life insurance you need to ensure your family will be financially secure when you’re gone. - How does age affect life insurance rates?
Does age affect life insurance? Do you even need it if you’re still young? Is ever it too late to qualify? We answer these questions and more.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Related Articles
Home insurance: Are you covered for wildfires, floods and other climate-related disasters?
Severe weather and disasters due to climate change are increasing home insurance costs in Canada. Here’s how to lower...
The best travel credit cards in Canada for 2024
These impressive travel cards can help turn your everyday spending into flights, hotels and more.
How Baker Tilly Toronto supports insurance providers in transition
Partner Content from
Baker Tilly Toronto
The best credit cards with mobile device insurance in Canada
Credit card mobile device insurance can save you money on costly device replacement or repairs. Here are the...
Driving underwater: Is your car worth less than what you’re paying for it?
Canadians who financed or leased their new vehicles in the last two years could be paying more in loans...
Why are vets so expensive?
The costs of keeping the family pet healthy have outpaced inflation in Canada. We look at why it’s happening...
Does home insurance cover wildfire damage?
Here’s what’s covered if your home or rental apartment has been damaged in a wildfire and how to file...
Using whole life insurance for tax-free income in retirement
Borrowing against a policy’s cash value can provide tax-free income. But there are still costs involved and other factors...