What is a premium? A) the amount paid by the policyholder before the insurance policy starts paying on the claim B) the maximum amount a policy will pay out in any one year C) the amount paid by the policyholder to the insurer on a regular basis for the policy D) the amount paid after the deductible has been satisfied and until the out of pocket maximum has been reached
Option A "the amount paid by the policyholder before the insurance policy starts paying on the claim" refers to the deductible, which is the amount that the policyholder is responsible for paying before the insurance policy starts paying on a claim.
A deductible is the amount of money that the policyholder is responsible for paying before the insurance policy starts paying out on a claim. The purpose of a deductible is to share the risk between the insurance company and the policyholder. Typically, a higher deductible will result in a lower premium (the amount paid by the policyholder to the insurer on a regular basis for the policy), and a lower deductible will result in a higher premium.
Option A is incorrect
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