Paying insurance premiums more frequently will result in what effect on overall policy premiums?

When insurance premiums are paid more frequently, such as on a monthly basis instead of annually, the overall cost of the policy tends to increase, resulting in higher premiums. This is primarily due to the administrative costs associated with processing more frequent payments. Insurance companies often implement a higher rate for policies paid in smaller increments to accommodate the added operational costs and potential risks related to regular payment schedules.

Furthermore, when premiums are paid in larger installments, insurers gain access to the funds sooner, allowing for investment opportunities. However, paying in smaller, more frequent amounts means they may not enjoy these benefits as fully, which can lead to higher net costs for the policyholder. Consequently, those who opt for more frequent payments usually end up paying more in total premiums over the life of the policy compared to those who pay annually.