An insurance premium is the amount of money an individual or business pays for an insurance policy. Insurance premiums are paid for policies that cover healthcare, auto, home, and life insurance. It also represents a liability, as the insurer must provide coverage for claims being made against the policy.
As a process, insurance companies examine the type of coverage, the likelihood of a claim being made, the area where the policyholder lives, his employment, his habits (smoking for instance), his medical condition (diabetes, heart ailments) among other factors.