What Is Premium Conversion?

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Part of the video series: Health Insurance Information

Summary: A premium conversion allows the policy holder of an insurance plan to pay monthly fees using pre-tax dollars instead of with part of the take-home paycheck. Consider a premium conversion with information from a Northwestern Mutual representative in this free video on insurance.

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By John Pinelli
eHow Presenter

John Pinelli is an insurance representative for Northwestern Mutual.read more

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"This is John Pinelli, financial representative talking to you today about premium conversion. What premium conversion allows you to do is instead of paying your insurance policies like you typically would with after tax dollars, this is the money that you take home as your take home pay, what this allows you to do is it allows you to pay for those policies with pretax dollars. So before you're taxed, your money would go in and pay those premiums directly and then you would be taxed. So this can offer you considerable discounts. But at the same time what may happen is your benefits might be eligible for taxation as well so check into that and see if making the premium conversion makes the most sense for you as an individual. But that it basically how premium conversion works. This has been John Pinelli, financial representative talking to you about premium conversion."