Which premium payment mode results in the highest total premium?

When considering premium payment modes, the impact on the total premium paid over time is influenced by the payment frequency. The correct answer indicates that the monthly payment mode results in the highest total premium.

This is primarily due to the fact that insurers often charge more for the convenience of allowing policyholders to pay their premiums more frequently. Each time a payment is made, regardless of the frequency, administrative fees and costs are incurred by the insurer. As a result, policies that allow for monthly payments generally include higher overall premiums compared to those that require annual or semi-annual payments.

By spreading payments out on a monthly basis, policyholders may end up paying additional costs that accumulate over the year, leading to a higher total premium. Conversely, when premiums are paid annually or semi-annually, policyholders can benefit from lower administrative costs and potentially discounts for paying in lump sum.

In summary, the structure of monthly payments often results in higher overall costs due to increased fees and lack of discounts, making this payment mode less economical over time.