AD Banker Comprehensive Practice Exam

In a life insurance policy, the premium payment is typically made on what basis?

1. Weekly

2. Monthly

3. Annually

4. Bi-annually

The correct answer is: Monthly

In a life insurance policy, premiums can be paid in various ways, and monthly payment is one of the most common options due to its convenience and affordability. Paying premiums monthly allows policyholders to manage their finances more effectively by spreading the cost over a shorter period rather than making a larger payment all at once. This method can help ensure that the policyholder maintains coverage without the financial strain of larger, less frequent payments. While premiums can indeed be paid weekly, annually, or bi-annually, the monthly option is particularly popular because it fits well into regular budgeting practices for many individuals. It allows them to incorporate the cost of life insurance into their regular monthly expenses, making it more manageable and less daunting. Thus, the monthly premium payment basis reflects a balance between affordability and the need to maintain continuous coverage.