Insurance premiums are the payments made by policyholders to an insurance company in exchange for coverage against potential risks and losses. These premiums are determined based on various factors, including the level of coverage, the risk associated with the insured entity, and statistical data about the likelihood of claims. Understanding insurance premiums is crucial as they represent the expected cost of insuring against specific risks, which ties into concepts like expected value and variance in determining the financial implications of these risks.
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