Insurance Term of the Day: Premiums

One of the definitions of premium (according to Google) is “something given as a reward, prize, or incentive.” The definition of premium as an insurance term is “an amount to be paid for an insurance policy.” Do you see how that could be a little confusing to someone who doesn’t know much about insurance?

“Thanks for choosing *Insert Insurance company name here*. You’re an ideal driver for us! Because of your great driving record, your safe car, and the low accident rate in your neighborhood, we’ve calculated your premium to be $500 for the first year.”

“My premium?! Oh my gosh! Thank you so much. You can write that check out to Amy Falls.”

“What? Ma’am, I don’t think you’re. . .”

“I knew purchasing that car was a great idea.”

“Ma’am, we’re not paying you, uh, you’re the one paying us. . . you know, just in case something happens to your car and we’ve got to cover the damages.”

*She gasps, followed by a pause.* “Oh.”

Amy Falls is a made-up name, but with the character’s cluelessness, her name could easily be replaced with mine.

Before purchasing your insurance, the insurance company will quote your policy. This means they are calculating how much you will need to spend to get the proper coverage for whatever you are insuring. There are multiple factors that are used to decide how much your premium will be. The cost depends on what kind of coverage you are wanting, where you live, your driving record, how far and how often you drive, your car, your credit history, your age and gender. These factors play a role the likelihood that the company will have to pay out on your behalf.


Do you have questions about your insurance? Find an insurance agent near you with our Agent Finder

Buzz Your
Insurance Agent

Search for a local agent with our agent finder map.

Agent Finder

Search All Blogs

Search
Generic filters
Exact matches only
Search in title
Search in content
Search in excerpt

Buzz Your
Insurance Agent

Search for a local agent with our agent finder map.

Agent Finder

Want to learn more about
our blog writer?

Read more about KayLynn's background.

Search All Blogs

Search
Generic filters
Exact matches only
Search in title
Search in content
Search in excerpt

How to Encourage Kids to Have Healthier Eating Habits

They May Not Eat Perfectly But They Certainly Can Eat Better

The Rising Popularity of “Celebrations of Life”

Final Services Are Changing. The Need for Life Insurance Is Not.

Seven Good Reasons to Take Up Biking

There’s More to Biking Than Tight Pants and Stylish Helmets

The Most Compelling Reason to Get Life Insurance

Of the Dozens of Reasons to Acquire Life Insurance, This May Be the Most Important

Staying Healthier: A Home Gym in the Space of a Closet

Motivation May Be a Factor But Lack of Space Should Not

Life Insurance For All Phases of Life

Why Life Insurance Should be a Part of Your Financial Future

What Happens to Your Debts After You Die?

Debts Don’t Just Disappear. Here’s Why.

Five Events That Should Trigger a Call to Your Life Insurance Agent

Life Changes. When It Does It May Prompt a Call To Your Life Insurance Agent.

“You Might Need Life Insurance If…”

Life Insurance is for More than Just the Breadwinner

6 Simple Ways to Save on Life Insurance

Nobody Wants to Spend More Than They Have To. Here Are Ways YOU Can Save.

Leave a Comment