The regular payment required to keep an insurance policy in force is called a premium.
A premium is the price an insurer charges for providing coverage. Depending on the policy, it may be paid monthly, quarterly, twice a year, or annually. The amount reflects factors such as the insured risk, coverage limits, claims history, location, age, and the insurer’s administrative costs. In life insurance, health insurance, home insurance, and auto insurance, premiums fund the insurer’s ability to pay covered claims.
Premium is often confused with other insurance terms. A deductible is the amount the policyholder usually pays toward a covered claim before the insurer contributes. A copayment, or co-pay, is a fixed amount paid for certain covered health-care services. A policy limit is the maximum amount the insurer will pay for a covered loss. None of those terms means the recurring price of maintaining coverage.
Failing to pay a premium can cause a policy to lapse or be canceled, although many contracts provide a grace period. Premiums can also change at renewal when risk, regulations, claims experience, or policy terms change. The exact payment schedule and consequences are set by the policy contract.