Ace the Alberta General Insurance Level 1 Exam 2025 – Insure Your Success Today!

Question: 1 / 400

What is the definition of a premium in terms of insurance?

The maximum amount an insurer will pay for a covered loss

The amount paid by the policyholder to the insurance company for coverage

The definition of a premium in insurance refers to the amount paid by the policyholder to the insurance company in exchange for coverage. This payment is typically made on a monthly, quarterly, or annual basis and serves as the cost of obtaining and maintaining an insurance policy.

When a policyholder pays the premium, they ensure that they are protected against specified risks as outlined in their policy. The premium amount can vary based on factors such as the type of coverage, the level of risk, the policyholder's claims history, and other underwriting criteria. Understanding the premium is essential for policyholders because it directly affects their financial commitment to the insurance coverage, and failure to pay the premium can lead to the cancellation of the policy and loss of coverage.

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A fee for filing a claim

The deductible that must be paid before coverage begins

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