What is the term for the amount of money paid to an insurance company for a policy?

The correct term for the amount of money paid to an insurance company for a policy is referred to as the premium. This is a crucial concept in insurance, as the premium is the cost associated with purchasing coverage for a certain period. It is essentially the “price” of the insurance policy, and policyholders are responsible for paying this amount to keep their policy active.

Understanding the premium is fundamental because it impacts the coverage you receive and is often determined by various factors such as the type of insurance, the level of coverage, and the insured's personal risk factors. In return for these premiums, the insurance company agrees to pay for covered losses or claims according to the terms of the policy.

Other terms like co-payment, deductible, and out-of-pocket costs refer to payments that may occur when a claim is made or certain services are utilized but do not represent the initial cost of securing the insurance policy itself. Co-payments are typically small amounts paid at the time of service, deductibles refer to the amount an insured must pay before coverage kicks in, and out-of-pocket expenses encompass any costs the insured pays that aren't covered by the insurance policy. Understanding these distinctions is important for navigating insurance options effectively.