Certified Application Counselor Practice Test

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Which of the following best describes a premium?

  1. A one-time payment for a service

  2. The yearly cost of health insurance

  3. The regular fee for maintaining insurance coverage

  4. The fee charged for specific medical services

The correct answer is: The regular fee for maintaining insurance coverage

The definition of a premium in the context of health insurance refers to the regular fee that an individual pays to maintain their insurance coverage. This payment can be made monthly, quarterly, or annually, depending on the insurance plan. It is essential to understand that the premium is distinct from one-time payments for services, yearly costs that may also include deductibles and out-of-pocket expenses, or specific fees associated with medical services. Instead, the premium is an ongoing cost necessary to keep the health insurance policy active, providing the insured with access to the benefits of the plan. This consistent payment structure is crucial for individuals to budget for their healthcare costs, ensuring they remain covered.

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