Answer :
Final answer:
The cost that is always incurred when buying insurance is the premium, which is the regular payment needed to maintain coverage. Other costs, such as deductibles and co-payments, are only relevant when claims are made. Understanding these different types of costs is essential for effective financial planning regarding insurance.
Explanation:
Understanding Insurance Costs
When buying insurance, one of the most consistent costs you will encounter is the premium.
The premium is the amount you pay periodically to maintain your insurance coverage, regardless of whether you make a claim or not. For example, whether you use your health insurance or not, you still need to pay your monthly premium, say [tex]$300. In contrast, a deductible is the amount you must pay out-of-pocket before the insurance coverage takes effect, and a co-payment (co-pay) is a specific payment you might make for a service, like $[/tex]20 for a doctor's visit.
This means that while you may need to pay a deductible or co-payment when receiving services, the premium is something that you are always required to pay to have the coverage in the first place.
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