Definition: The word "insurance premium" refers to the fee charged by an insurer for providing a financial guarantee that the policyholder will pay out a predetermined amount of money when the event or occurrence described in the policy occurs. In simple terms, a premium is a payment made by an insurance company to its customers to ensure that they receive their money. It is based on the risk involved and how likely the event is going to happen. The higher the premium, the more it will be charged. The definition of "premium" can vary depending on the type of policy and country. In some countries, a premium may not be considered an expense and is often included in the price of the policy. In other countries, a premium could be treated as a tax or a fee. In summary, insurance premiums are fees charged by insurers to cover the risk that comes with a policy, and they can range from one percent to 50% of the total cost of the policy.
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