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Perpetual insurance

Perpetual insurance

What is Perpetual insurance?

Perpetual insurance is a type of homeowners insurance policy written to have no term, or date, when the policy expires. From the effective start date, the coverageexists for perpetuity. The insured deposits money, called a deposit premium, with the insurer for insurance for the life of the risk.

Characteristics of Perpetual Homeowners Insurance

  • A perpetual homeowners insurance policy does not have any term and it does not expire unless at the request of the insured.
  • The premium of perpetual homeowners insurance differs greatly from regular home insurance premiums in that it is payable on a deposit principle. The policyholder deposits funds to get protection for their homes against any risk of loss. If the insured or the insurance provider decides to terminate the policy, the policyholder is entitled to full refund of the deposited money.
  • The deposit premium payable under perpetual homeowners insurance is typically much higher than the average annual premium of a regular home insurance policy. Yet, the deposit premium's refundability and its security characteristics outweigh the drawbacks of its high cost.
  • Given the common present-day problems having to do with insurers refusing to renew their clients' homeowners policies, having perpetual homeowners insurance looks like a very reasonable option, providing guarantee that your home will always be protected no matter how many claims you make.
  • Perpetual homeowners insurance also provides tax advantages: every insured is entitled to receive a tax return calculated by dividing the monthly gross income necessary to pay a regular term home insurance premium, by the money an insured actually pays towards their perpetual home insurance policy.