What does "premium" refer to in health insurance?

In health insurance, "premium" specifically refers to the amount of money that a policyholder must pay to maintain their insurance policy. This payment is typically made on a monthly basis but can also be paid weekly, quarterly, or annually, depending on the specific plan and the insurer's terms.

Understanding the role of the premium is crucial, as it is essentially the cost of securing coverage under the health insurance plan. Unlike the deductible, which is the amount the insured must pay out-of-pocket before insurance benefits kick in, or the coverage limit, which caps the total benefits the insurer will pay, the premium is a consistent expense incurred to keep the policy active. The total value of claims made in a policy year represents payouts from the insurer, while the deductible is a barrier to beginning insurance coverage; neither defines the cost of obtaining the insurance itself, which is why the premium is the correct term in this context.