In the context of insurance, a premium is the amount of money that a policyholder pays to an insurance company in exchange for coverage. Premiums can be paid on a regular basis, such as monthly, quarterly, or annually, depending on the terms of the policy. The amount of the premium is determined by factors such as the type of insurance, the level of coverage, and the policyholder’s risk profile.

For example, in auto insurance, premiums are based on factors such as the driver’s age, driving history, and the type of car being insured. In health insurance, premiums are influenced by factors such as age, health condition, and tobacco use. Higher-risk policyholders, such as those with poor health or a history of accidents, typically pay higher premiums, while lower-risk individuals may receive more affordable rates.