What is typically the effect of a longer benefit period on policy cost?

A longer benefit period in an insurance policy tends to increase the overall cost of that policy. This is because a longer benefit period means the insurance company is at greater risk of having to pay out claims for an extended time, especially in the case of health and accident coverage. As the potential payout duration extends, the insurer needs to adjust premiums to account for this increased risk and liability.

Consequently, policyholders will commonly see higher premiums associated with plans offering more extended benefit periods, as insurance companies factor in the higher likelihood of incurring significant costs over a more extended period. Longer benefits can also reflect a commitment from the insurer to provide more comprehensive coverage which typically warrants a corresponding increase in price.

In contrast, shorter benefit periods generally result in lower premiums because the insurance company's liability is reduced, leading to lower costs for consumers. Hence, understanding the relationship between benefit periods and policy costs is crucial for anyone evaluating health and accident insurance options.