What term describes the money a person pays to an insurance company for a policy?

The term that describes the money a person pays to an insurance company for a policy is "premium." The premium is typically paid either monthly, quarterly, or annually and is the primary cost of maintaining an insurance policy. This payment ensures that the individual is covered by the insurance company in case of specific events or damages outlined in the policy.

Understanding this concept is important for managing personal finances, as it is a regular expense that individuals need to budget for if they wish to maintain their insurance coverage. The premium is distinct from other terms: a deductible is the amount that the policyholder must pay out-of-pocket before the insurance company begins to pay for covered expenses, a benefit is the amount that the insurance company pays out when a claim is made, and a copayment is a fixed amount paid by the insured for specific services, often in healthcare scenarios. Thus, recognizing the role of premiums in insurance helps individuals make informed decisions about their coverage and financial planning.