Answer :
Final answer:
The always-present cost when buying insurance is the premium, which is the periodic amount paid to maintain coverage. Other costs like deductibles and co-payments may apply only when specific services are used. Understanding these costs helps individuals effectively manage their insurance expenses.
Explanation:
Understanding Costs of Insurance
When buying insurance, several costs may be involved, but one cost that is always present is the premium. The premium is the amount a policyholder must pay periodically to maintain their insurance coverage, regardless of the need to utilize services. This is different from other costs like deductibles, co-payments, and payouts, which may vary based on specific scenarios or claims.
Types of Insurance Costs
- Premium: The regular payment made to the insurance company.
- Deductible: The amount paid by the policyholder before the insurer pays for covered services.
- Co-payment: A set fee paid by the policyholder for specific services.
- Payout: The amount received from the insurer for claims made.
It is important to remember that while deductibles and co-payments are also costs, they are conditional and only applicable when services are used, whereas the premium is a fixed cost that must always be paid for insurance coverage to remain active.
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