Define "premium" in insurance.

In the context of insurance, "premium" refers to the amount paid by the insured to the insurer in exchange for coverage or protection against specific risks. This payment, typically made on a regular basis (monthly, quarterly, or annually), is essentially the policyholder's investment in the insurance coverage they receive. The premium amount is determined based on various factors, including the type of insurance, the level of coverage, the insured's risk profile, and other underwriting criteria.

By understanding that the premium is a vital part of the insurance contract, policyholders can grasp its significance in maintaining their coverage and the insurer's ability to provide financial support in case of a loss. The premium is essential for the insurer to pool resources to pay for claims and manage the operational costs associated with running the insurance business.