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What is an insurance premium?

  1. A special coverage option

  2. The amount your insurance costs

  3. A mandatory insurance tax

  4. A form you fill for insurance

The correct answer is: The amount your insurance costs

An insurance premium is the amount that you pay to an insurance company for your insurance policy. It is a regular payment that ensures your coverage is active and up-to-date. This premium is based on a number of factors, including your age, risk level, and the type of coverage you are seeking. Choice A is incorrect because a "special coverage option" is not the same as a premium. Choice C is incorrect because an insurance premium is not a tax, it is a fee paid to a private company. Choice D is incorrect because a form is not the same thing as a cost or fee.