Final answer:
A premium is the regular payment made to an insurance company for coverage. It should not be confused with a deductible, a co-payment, or coinsurance, which are different types of costs that a policyholder may be responsible for as part of an insurance policy.
Step-by-step explanation:
A premium in the context of insurance refers to the amount you pay the insurance company for coverage. It is a regular payment that individuals or firms make to remain insured.
The insurance company utilizes these premiums to create a pool of funds from which they can pay out claims when members suffer a covered event or loss. This concept is separate from other insurance-related terms like deductibles, co-payments, or coinsurance, which are costs that policyholders are responsible for paying out-of-pocket either before the insurance coverage starts paying benefits (in the case of a deductible), as a fixed fee for certain medical services (for a co-payment), or as a percentage of the medical costs (for coinsurance).