Classification of Premiums as Single and Periodic

Life-insurance policies may be purchased by a single premium, an annual premium, or a premium paid weekly, monthly, quarterly, or semi-annually. Of these the annual premium is by far the most important and may continue until the death of the policyholder or the maturity of the policy or may be limited to a definite number of years as in a twenty-payment life policy and a twenty-payment thirty-year endowment. In the twenty-payment life policy, for instance, the premiums continue for twenty years provided death does not intervene before this period has elapsed and after the twenty payments have been made the policy requires no further payments and matures whenever death occurs. Few insurance contracts, with the exception of annuities, are purchased by single premiums, although they may be so purchased and the companies will quote single premium rates for any kind of policy. Nevertheless, in taking up the subject of rate computation in life insurance it is necessary to begin with a thorough study of the single premium, inasmuch as it furnishes the method of approach in determining annual premiums.