What does the term "premium" refer to in insurance terms?

In insurance terms, the term "premium" specifically refers to the amount paid by the insured to acquire and maintain insurance coverage. This payment is typically made on a regular basis, such as monthly or annually, and serves as the price for the protection provided by the insurance policy. The premium is essentially the cost associated with transferring risk from the policyholder to the insurer.

This payment ensures that in the event of a covered loss, the insurance company will provide financial protection as stipulated in the terms of the policy. The premium can vary based on several factors, including the type of insurance, the amount of coverage, the insured’s risk profile, and other underwriting criteria.

In contrast, the other options deal with different aspects of an insurance contract or policy but do not define the premium itself. For instance, the excess amount paid during claims pertains to deductibles or co-payments, while the total amount insured refers to coverage limits rather than the cost of the policy. Fees associated with policy changes are not considered part of the premium but rather administrative costs that may arise during the policy's life.