How is your insurance premium calculated?
Firstly, your insurer will calculate how likely you are to claim, and how much that claim would cost. This calculation will depend on the type of cover you are buying as well as a bunch of other factors, like your previous claims history, where you live and work, crime and natural disasters in your area, the type and value of the item you are insuring, etc.
Once they have figured out your expected claims they will add on an amount to cover their operating cost, some profit and the cost of any additional benefits like cashback, SASRIA, etc. and then finally some VAT.
What is the relationship between my insurance premium and my excess?
The higher your excess, the lower your premium and vice versa. So, choosing an excess is about finding a sweet spot between what you can afford to pay on a claim and what you pay each month for your insurance.
One way to calculate an excess that’s right for you is to see what’s the maximum amount you can comfortably afford to pay out of your pocket if you had to make a claim tomorrow.
How often do I need to pay my insurance premium?
With insurance, you need to pay your premium first before your cover will start. Thereafter, you will typically have to pay your premium every month, although insurance policies with other terms do exist (e.g. you might pay once every quarter or every year).