An insurance premium is a monthly payment made to an insurance company to maintain coverage and ensure financial protection against specific events. The insurance company calculates this premium based on the risk of events occurring among the insured population.
An insurance premium is a payment that households or firms regularly make to an insurance company to maintain their insurance coverage. The insurance entity then utilizes this pool of funds to compensate any member who suffers a significant financial setback from an event covered by the policy. The insurance firm sets these premiums based on the likelihood of events occurring within a group of insured individuals. Therefore, the correct answer to the student's question is: b. a monthly payment that ensures insurance coverage for a person.