premium
The amount of money an individual or business pays periodically to an insurance company to keep an insurance policy active.
In insurance, a premium is a recurring cost (monthly, semi-annually, or annually) that acts as the purchase price of the protection. In general English, it can also mean a high value or an extra charge.
Word relationships
- fee: A fee is a general charge for services, whereas a premium is specifically a recurring payment for insurance coverage.
- rate: A rate is the cost per unit of insurance, while the premium is the total amount paid by the policyholder.
- payout: A payout is the money disbursed by the insurance company to the insured, whereas a premium is paid by the insured to the company.
Commonly confused with
- deductible: The premium is paid regularly to maintain the policy, while the deductible is paid only when a claim is filed.
Word family
- premium (noun): The periodic payment for an insurance policy.
- premium (adjective): Of high quality or superior value.
Collocations
- monthly premium
- annual premium
- insurance premium
- pay a premium
Idioms & expressions
- at a premium
Example sentences
- "The policyholder paid a monthly premium of eighty dollars to keep her auto insurance active." Personal Finance
Memory hook
Think of paying a 'premium' to get 'premium' protection for your brand-new car. Pay the premium to keep the protection.
When not to use
Do not confuse with a deductible, which is only paid when you actually make a claim, or a payout, which is the money you receive from the insurer.
Fun facts
- In the 17th century, early marine insurance premiums were often paid in gold coins or physical goods before paper currency became standardized.
Related words
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