Premium
The amount of money you pay to an insurance company on a regular basis to keep your insurance policy active. This is the cost of having insurance, regardless of whether you ever file a claim.
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Example
“My monthly health insurance premium increased by 12% this year, so I switched to a plan with a higher deductible.”
Memory Tip
Your premium is the price of admission. You pay it whether you use it or not.
Why It Matters
Premiums are your most predictable insurance cost.
Common Misconception
People often think paying a higher premium means better coverage. It does not.
In Practice
Bundling policies, clean driving records, and raising your deductible can all reduce your premium.
Etymology
From Latin praemium, meaning reward or prize.
Common Misspellings
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Related Terms
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See Also
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