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Glossary > Insurance > General > General
Legal Disclaimers

Premium

Premium is the amount of money a consumer pays to an insurance company in exchange for an insurance policy. It is typically paid on a regular basis, such as monthly or annually, to maintain coverage.

Example #1

For example, if you purchase a car insurance policy for $100 per month, that $100 is your premium payment.

Example #2

Another example is paying $1,200 upfront for an annual homeowners insurance premium.

Misuse

Misuse of premium could involve an insurer charging excessively high premiums compared to the coverage provided. This exploitation can lead to financial strain on consumers and create barriers to accessing essential insurance protection. It's crucial to safeguard against unfair premium practices to ensure affordability and accessibility of insurance for all consumers.

Benefits

The benefit of paying a premium is that it provides financial security and peace of mind in case of unexpected events. By paying a premium, individuals transfer the risk of potential large financial losses to the insurance company, allowing them to protect their assets and livelihood without facing significant financial burdens in the event of a covered loss.

Conclusion

Understanding the concept of premium empowers consumers to make informed decisions about their insurance needs, ensuring they receive adequate coverage at a fair price. By promoting transparent premium practices, we support a marketplace where individuals can access essential insurance protection without facing unfair financial burdens.

Related Terms

InsuranceCoveragePolicyInsurer

See Also

DeductibleNegligenceAccident ForgivenessUM-UIM CoverageAccident ForgivenessAssigned RiskTowing And Labor CoverageTowing CoverageUnderinsured Motorist CoverageUninsured MotoristRetentionExperience Modification FactorExperience Modification RateGeneral Liability InsuranceGuaranteed RenewablePre-existing ConditionGuaranteed RenewableNon-CancelableWaiver Of PremiumFlood ZoneLow-Risk AreaCash ValueCost Of InsuranceProspectusVariable Life InsuranceCash ValueLimited-pay Whole Life InsuranceNon-participating Whole Life InsurancePaid-up PolicyCash ValueSingle Premium PaymentWaiting PeriodElimination PeriodWaiver Of PremiumPolicy CancellationPolicy TierReinstatement TermsRenewal TermsBreed-specific CoverageCo-insurancePet InsuranceRental Income Loss CoverageHome InsuranceHazardous ActivityAccident ForgivenessActuaryClaimDeductibleInsuranceInsuredInsurerLoss RatioPropertyRateReinsuranceSurchargeUnderwriterUnderwriting

Last Modified: 4/29/2024
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