What does the premium refer to in insurance?

In insurance terminology, the premium refers to the fee paid for the insurance policy. This is typically a monthly, quarterly, or annual payment made by the policyholder to the insurance company in exchange for coverage. The premium is essential for maintaining the active status of the policy, allowing the insurance company to provide the agreed-upon protection against specified risks.

The premium is determined by various factors, including the level of coverage, the type of policy, and the individual’s risk profile. It is important for policyholders to understand their premiums, as they can impact their overall budget and financial planning.