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Premium

A premium is the amount of money an individual or organization pays to an insurance company in exchange for coverage under an insurance policy. It is the cost of maintaining protection against financial loss and ensures that the insurer can pay claims, manage risk, and cover administrative expenses. Premiums can be paid monthly, quarterly, semi-annually, or annually, depending on the policy and payment arrangement.

In health, dental, life, and disability insurance, the premium amount is determined by factors such as age, health status, occupation, coverage level, and plan design. Group insurance premiums are typically shared between the employer and employees, while individual policyholders are responsible for paying the full premium themselves. If premiums are not paid within the grace period, the policy may lapse and coverage will end.

Example:

If your individual health insurance plan costs $150 per month, that is your premium. As long as you continue making payments on time, your coverage remains active, and the insurer is obligated to pay eligible claims.

What to Watch For:

Keep track of payment due dates to avoid missed premiums and potential lapses in coverage. Premiums may increase over time due to age, rising healthcare costs, or plan renewal adjustments. When comparing insurance options, consider not only the premium amount but also the benefits, limits, and exclusions to ensure good value for cost.

Related Terms

Paramedical Disciplines

Paramedical disciplines refer to regulated health professionals who provide therapy or rehabilitation services outside of hospital settings. Common examples include physiotherapists, chiropractors, massage therapists, acupuncturists, naturopaths, osteopaths, psychologists, and speech-language pathologists.

Pay-Direct card / Drug card

A pay-direct card, also known as a drug card, is a plastic or digital card issued by your health insurance provider that allows pharmacies to bill your insurer directly for eligible prescription drugs. Instead of paying the full cost upfront and submitting a claim later, you pay only your portion - such as a deductible or coinsurance - at the point of sale.

Per Incident

Per incident refers to the way certain insurance benefits are calculated or limited based on each separate event, illness, or accident rather than by year or lifetime. When a benefit is paid “per incident,” it means you are eligible for reimbursement each time a new, distinct occurrence happens, up to the maximum amount specified for that type of claim.

Per Person / Per Family

Per person and per family describe how benefit limits, deductibles, or maximums are applied within a health or dental insurance plan. A per person limit means the specified amount applies individually to each insured member, while a per family limit represents the total combined coverage for all members under one policy.

Per-Practitioner Annual Maximum (Paramedical)

The per-practitioner annual maximum is the total amount your plan will reimburse for services from one specific type of provider in a single benefit year. For example, if your plan pays up to $500 for massage therapy annually, once that amount is reached, additional treatments from that provider type are no longer covered until the next year.

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