Insurance

Premiums

A premium is the price you pay for insurance coverage. Premiums depend on the type and amount of risk the insurer is taking.

4 min

Insurance 101 • 03

A premium is the price of the insurance policy.

You may pay it monthly, annually or on another schedule.

Insurers price coverage based on expected risk and policy features.

The factors vary by insurance type and by the rules where you live.

Premiums can be affected by

01Type of insurance02Amount of coverage03Deductible04Claims history05Age or health for some policies06Property or vehicle characteristics

Premium and deductible are different costs.

01

Premium

What you pay to keep coverage in force.

02

Deductible

What you may pay when a covered claim happens.

Changing the deductible can change the premium.

Lower deductibleOften higher premium
Higher deductibleOften lower premium
Trade-offPay more now or keep more claim risk
Exact priceDepends on insurer and policy

The lowest premium is not automatically the best policy.

Lower cost can come with less coverage, higher deductibles, different limits or exclusions.

Compare premiums together with

01Coverage amount02Deductible03Exclusions04Limits05Policy conditions

Remember this

Premium is the price, not the whole product.

Compare what you pay with what risk the policy actually transfers.

Lesson complete

Reviewed 2026-08-18

Sources

Financial Consumer Agency of CanadaHow insurance works ↗
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