Insurance premium is a specified amount stipulated by the insurance company, which the insured individual should periodically pay to maintain the actual coverage of insurance. 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.

An insurance premium is the amount of money that an individual or business must pay for an insurance policy. The insurance premium is income for the insurance company, once it is earned, and also represents a liability in that the insurer must provide coverage for claims being made against the policy.