Final answer:
An insurance premium is the amount of money an individual or business pays to an insurance company in exchange for coverage against specified risks or potential losses.
Step-by-step explanation:
Insurance premium is the amount of money an individual or business pays to an insurance company in exchange for coverage against specified risks or potential losses. It is essentially the cost of the insurance policy.
The premium amount is determined by several factors, including the type and level of coverage, the insured's risk profile, and the insurance company's pricing structure. Premiums can vary depending on factors such as age, health status, driving record, and the value of the property being insured.
For example, in auto insurance, a young driver with a history of accidents may have a higher premium compared to an experienced driver with a clean record. Similarly, a business in a high-risk industry may have higher insurance premiums compared to one in a low-risk industry.