A premium is the money you pay so that an insurance company will take on a risk for you. You usually pay it monthly, quarterly or once a year. If you stop paying, cover usually stops after a short grace period.
Key takeaways
- Premium size depends on the risk, the cover amount, your age or property type, and your claims history.
- Paying on time keeps the policy in force; missing payments can leave you unprotected.
- Shop around, but read what each premium actually buys, not only the sticker price.
- Life and general insurance price risk differently, so premiums are not comparable across product types.
Why it matters in Ethiopia
Households and businesses buy cover from local insurers and, increasingly, through banks. Understanding what a premium buys helps you avoid underinsuring a car, home or business just to save a small monthly amount.