Chartered Life Underwriter Practice Exam

The term "premium" in life insurance specifically refers to the amount of money that a policyholder pays to the insurance company in exchange for coverage. This payment is crucial, as it is the primary source of revenue for the insurer, enabling them to provide the promised benefits in the event of a claim, such as a payout upon the insured's death. Premiums can vary based on numerous factors, including the insured's age, health, and the amount of coverage selected. Understanding this term is fundamental for anyone engaging with life insurance, as it establishes the contractual relationship between the insurer and the policyholder, determining what the policyholder will pay and what coverage they will receive.