An amount of money has to be paid regularly to the insurance company by an insurance holder for insured life risk. Insurance premium means annual payment made by a person to an insurance company.
premium means the extra payment to buy a share. This word mostly use in the
share market where shareholder can sell or buy a share. If the shareholder buy
a share with the extra money and face value of it, then that’s the extra money
is called the premium.
But in the
insurance point of view of premium refers the different meaning. Premium means
that type of money that an insurance company takes from the insurance holder by
promising that he must fulfill the losses if occurred in the insured product.
If this premium is paid more than one than its called installment. For the
contract of the life insurance, insurance holder has to pay his installment to
the insurer in different period of time. In this type of proposed insurance,
insurance holder must pay money for insured his life by the installment. This
installment is called the premium of the life insurance. Actually premium is
just the purchasing price of the insurance.
Premium is that money for which insurer provides financial security against risk in behalf of the insurance policy holder. Premium can be paid in one time or several times.
To know more about premium in insurance or insurance premium, check out: features of premium in insurance.