insurance premium

(noun)

The amount charged to a policy holder for a certain amount of insurance coverage.

Related Terms

Examples of insurance premium in the following topics:

  • Gender Inequality in Health Care

    • Gender discrimination in health care manifests itself primarily as the difference that men and women pay for their insurance premium.
    • More women than men are insured in the United States.
    • Gender discrimination in health care manifests primarily as the amount of money one pays for insurance premiums—the amount paid per month in order to be covered by insurance.
    • Women statistically pay far higher premiums than men.
    • Fewer than ten state governments prohibit gender discrimination in insurance premiums.

  • Compensation and Competition

    • ., health insurance).
    • Employers think about the total compensation cost of employees and that calculation considers what they pay in health insurance premiums, in addition to salaries and wages.
    • Since insurance premiums continue to grow rapidly, this cost is increasingly replacing other forms of compensation.
    • The Council of Economic Advisors predicts that eventually wages will actually be reduced in real (inflation-adjusted) terms as the increase in insurance premiums will require reductions in non-insurance compensation.
    • Health insurance premiums are thus a cause of salary and wage growth stagnation for much of the population in the U.S.

  • Health Care Reform Under Obama

    • It would subsidize insurance premiums for people making up to 400% of the FPL ($88,000 for family of 4 in 2010) so their maximum "out-of-pocket" payment for annual premiums would be on sliding scale from 2% to 9.5% of income.
    • Starting in 2014, the law will prohibit insurers from denying coverage (see guaranteed issue) to sicker applicants or imposing special conditions such as higher premiums or payments (see community rating).
    • As a result, insurers devoted resources to such avoidance at a direct cost to effective care management, which is against the interests of the insured.
    • Some analysts have argued that the insurance premium structure may shift more costs onto younger and healthier people.
    • Approximately $43 billion was spent in 2008 providing non-reimbursed emergency services for the uninsured, which the Act's supporters argued increased the average family's insurance premiums.

  • The Savings Association Insurance Fund (SAIF)

    • In the 1990s, SAIF premiums were, at one point, five times higher than BIF premiums; several banks attempted to qualify for the BIF, with some merging with institutions qualified for the BIF to avoid the higher premiums of the SAIF.
    • This drove up the BIF premiums as well, resulting in a situation where both funds were charging higher premiums than necessary.
    • In the 1990s, SAIF premiums were, at one point, five times higher than BIF premiums.
    • The FDIC maintains the DIF by assessing depository institutions an insurance premium.
    • The amount each institution is assessed is based both on the balance of insured deposits, as well as on the degree of risk the institution poses to the insurance fund.

  • Contractual Saving

    • Insurance companies provide protection for people who buy insurance policies.Insurance policy prevents financial hardship, such as a medical emergency, car accident, or the death of a family member.Insurance companies are financial intermediaries because they link the funds from the policyholders to the financial markets.Policyholders make periodical payments to the insurance company called premiums.Insurance company will invest the premiums in the financial
    • markets.For the insurance company to earn a profit, the amount of interest earned in the financial markets plus the total amount of premiums must exceed the amount paid for claims.Largest insurance companies include Allstate, Aetna, and Prudential.Most states established commissions that regulate insurance companies.Commissions may limit premiums, minimize fraud, and prevent the insurance companies from investing in risky securities.
    • Insurance companies use two strategies to combat moral hazard and adverse selection.First, insurance companies gather information about the policyholders, such as driving records, medical records, and credit histories.Consequently, the insurance company charges a higher premium to a person who is likely to file a claim, which we call a risk-based premium.Second, insurance companies use a deductible.When a person makes a claim, the person must pay the first portion.For example, a person buys health insurance with a $500 deductible.After this person has paid the first $500 to a doctor, then the insurance company pays the remainder of the claim.This passes some of the responsibility to the person holding the insurance policy.Finally, a person could buy insurance with smaller premiums but with a greater deductible.
    • First type of insurance company is a life insurance company.These companies purchase long-term corporate bonds and commercial mortgages because they can predict future payments with high accuracy.Furthermore, the insurance companies are organized in two ways: Mutual company or stock company.Insurance policyholders own a mutual company because the insurance policy functions as corporate stock, while a stock company is a corporation that issues stock.Thus, the shareholders own the company, while the insurance policyholders do not.Stock company is more common because a stock company has more funding sources.They receive funding by selling stock to shareholders, and receive revenue by selling insurance policies.Most policies issued are called term life policies.Person buying the life insurance must pay the premium for the rest of his life.These policies are popular because the policyholder can borrow against the value of the life insurance policy, when he retires.Borrowing against insurance is an annuity.An annuity pays a retired person a specific amount of money each year.
    • Second type of insurance company is property and casualty insurance companies.They are organized as either a stock company or mutual company, and they insure against theft, floods, illness, fire, earthquakes, and car accidents.These companies tend to purchase liquid, short-term assets because these companies cannot accurately predict the amount of future claims.Insurance companies charge premiums that correspond to the chance of the event occurring.For example, a homeowner in California would pay a higher premium for earthquake insurance than a homeowner in the Midwest of the United States because California experiences more earthquakes.

  • Health Care Reform

    • Coverage would be guaranteed regardless of health status and premiums would not vary based on health status.
    • The PPACA also set a minimum ratio of direct health care spending to premium income, created price competition bolstered by the creation of three standard insurance coverage levels to enable like-for-like comparisons by consumers, and also created a web-based health insurance exchange where consumers can compare prices and purchase plans.
    • The system preserves private insurance and private health care providers and provides more subsidies to enable the poor to buy insurance.
    • Premium cap for maximum "out-of-pocket" pay will be established for people with incomes up to 400 percent of the Federal Poverty Line.
    • Most people will be required to obtain health insurance or pay a tax.

  • The Affordable Care Act

    • Its goals were to provide all Americans with access to affordable health insurance, to require that everyone in the United States acquire some form of health insurance, and to lower the costs of healthcare.
    • The plan, which made use of government funding, created private insurance company exchanges to market various insurance packages to enrollees.
    • Obama proposed an expansion of health insurance coverage to cover the uninsured, to cap premium increases, and to allow people to retain their coverage when they leave or change jobs.
    • The plan also includes medical spending cuts and taxes on insurance companies that offer expensive plans.
    • The final version of the Affordable Care Act includes health-related provisions to take effect over four years, including expanding Medicaid eligibility for people making up to 133% of the federal poverty level (FPL) starting in 2014; subsidizing insurance premiums for people making up to 400% of the FPL ($88,000 for family of four in 2010) so their maximum out-of-pocket payment for annual premiums will be from 2 to 9.5% of income; providing incentives for businesses to provide health care benefits; prohibiting denial of coverage and denial of claims based on pre-existing conditions; establishing health insurance exchanges; prohibiting annual coverage caps; and support for medical research.

  • Income Security Policy and Policy Making

    • Adverse selection refers to the fact that "workers who have the highest probability of becoming unemployed have the highest demand for unemployment insurance."
    • Adverse selection causes profit maximizing private insurance agencies to set high premiums for the insurance because there is a high likelihood they will have to make payments to the policyholder.
    • High premiums exclude many individuals who otherwise might purchase the insurance.
    • "At the same time, those workers who managed to obtain insurance might experience more unemployment other than what would have been the case."
    • The private insurance company would have to determine whether the employee is unemployed through no fault of their own, which is difficult to determine.

  • Health Insurance

    • Health insurance is insurance against the risk of incurring personal medical expenses.
    • By estimating the overall risk of health care that a target group will require, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in an insurance agreement.
    • Two types of health insurance exist in modern society, private health insurance and publicly funded health insurance.
    • Some of the essential terms associated with health insurance are premiums, deductibles, co-payments, and explanations of benefits.
    • A premium is the amount a policy-holder or his sponsor (e.g. an employer) must pay to a health plan to purchase health coverage.

  • Social Insurance

    • It is funded by taxes or premiums paid by (or on behalf of) participants (although additional sources of funding may be provided as well); and
    • Medicare is an example of a social insurance program, while Medicaid is an example of a welfare one.
    • In the United States, Social Security, Medicare, and unemployment insurance are among the most well-known forms of social insurance.
    • Medicare is funded through revenue from FICA and SECA payroll taxes, as well as through premiums paid by Medicare enrollees and general fund revenue from the federal government.
    • Social Security is one of the best-known social insurance programs in the United States.