Definition

• A health insurance premium is a certain amount of money paid to a health insurance company for a policy. It is not associated with paying off a debt or adding funds into an existing account for the policyholder. Instead, it is simply a regular payment made to keep the policy active.
  
  

Time Period

• The time period of a health insurance premium is very important. If the premium is not paid according to the agreed upon time period, the payment is consider late—and the policy will be declined. Typically, health insurance premiums must be paid out every month, but there are some exceptions, depending on the insurance company and the employer.
  
  

Purpose

• The premium helps the insurance company make money. Health insurance companies carefully balance the policies they have to pay out when someone becomes ill with the premiums they receive from all policyholders. This is why health insurance (and life insurance) companies are so interested in the likelihood of a policyholder becoming sick—and may adjust health insurance premiums accordingly.
  
  

Payments

• Payments for health insurance are typically drawn out of employee checks automatically. For many plans, the employer pays a percentage of the premium, and the rest is deducted from the paycheck. This makes it easy for employees to make payments on time. Unions and other organizations may also help make premium payments.
  
  

Deductibles

• Premiums should not be confused with deductibles, which are changeable amounts that must be paid by the policyholder out of pocket, before the policy takes effect. These deductibles ensure insurance is only used for major medical issues. The premium will not affect these payments or any other part of the policy.