Question

Payments made to an insurance company in return for a policy of insurance are called :

A. risk expenses
B. premiums
C. risk expenditures
D. deductibles

Answer 1

The correct answer is letter "B": premiums.

Step-by-step explanation:

Insurance premiums are the payments individuals make to companies providing policies for the coverage of health care, vehicles, and home. Once an individual enrolls for insurance earns the obligation of making payments to the insurance company so they can render the services agreed on the policy. Premiums are calculated according to the risk of the insured in using the coverage and are paid on a regular basis or in a lump sum.

Answer 2

The answer is B.

Step-by-step explanation:

A premium is the money a business or an individual pays for an insurance policy or it is the price of an insurance policy. They are many policies individuals or businesses can buy and they include healthcare insurance, home insurance, auto insurance, life etc.

Premium can be paid monthly, quarterly, semi-annually or yearly.

The premium paid by a business or an individual is income for the insurance company. Businesses or individuals pay premium in advance. While premium paid in advance is an asset to the business or individual at initiation, it is a liability to the insurance company.