A premium is a fee charged by an insurance company to an insurance policy enrollee, and this fee represents the enrollment price for the benefits within the plan. The amount of the premium is often based on multiple factors related to the enrollee including the enrollee’s likelihood to make claims and the cost of those claims.
If the enrollee discontinues this payment obligation, the coverage may be cancelled by the insurance company. A premium is normally paid on a monthly schedule. However, some insurance products may have different schedules, such as a quarterly or annual premium payment.
If the enrollee enrolls in a new insurance plan and fails to pay his or her first premium, the plan will generally fail to effectuate, which means the insurance coverage will not be active for use by the enrollee.
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