What is the term used for the scheduled fee paid by a policyholder for insurance coverage?

• A. Deductible
• B. Premium
• C. Co-pay
• D. Fee-for-Service

Answer: (B)

The term representing the scheduled fee paid by a policyholder for insurance coverage is "premium." This amount is typically assessed either monthly, quarterly, or annually, depending on the terms of the insurance policy. The premium is the primary cost of the insurance, and it is essential for maintaining active coverage. When the policyholder pays this fee, they secure the promise from the insurer to provide financial protection against specified risks, such as property damage or liability claims.

Understanding the concept of a premium is crucial for anyone involved in insurance, as it establishes a fundamental aspect of the insurance contract. It differs significantly from other terms commonly associated with insurance. For instance, a deductible represents the amount the policyholder must pay out of pocket before the insurance company starts to pay for a covered claim. Similarly, a co-pay is a fixed fee a policyholder pays for certain services at the time of care, often seen in health insurance. Fee-for-Service is a payment model where providers are paid for each service rendered, which is not directly related to the insurance premium. Hence, identifying the premium is vital for comprehending the financial obligations associated with maintaining an insurance policy.