College

Which is always a cost when buying insurance?

A. Premium
B. Deductible
C. Co-payment
D. Payout

Answer :

Final answer:

The cost that is always present when buying insurance is the insurance premium, which is the fee paid to maintain a policy. Other costs, such as deductibles, co-payments, and payouts, are additional and vary depending on the type of insurance. Therefore, the premium is a consistent factor in all insurance purchases.


Explanation:

Understanding Insurance Costs

When you purchase insurance, one of the primary costs you will encounter is the insurance premium. The premium is the amount you pay, typically on a monthly or annual basis, to maintain your insurance coverage. It does not matter what kind of insurance it is, whether it's health, auto, or home insurance; the premium is a constant factor in the total cost of the policy.

On the other hand, terms like deductible, co-payment, and payout work differently:

  • Deductible refers to the amount you must pay out of pocket before your insurance coverage kicks in.
  • Co-payment is a fixed fee you pay for certain services or medications, typically under health insurance policies.
  • Payout is the amount the insurance company pays you or a third party when you file a claim.

Thus, while all these are relevant to insurance, only the premium is an unavoidable cost associated with buying any insurance policy.


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