Every type of insurance has a monthly payment called a premium, and how much you pay depends on how risky you are

In order to keep your car, home, apartment, or health insured, you need to pay your monthly premium.

An insurance premium is a monthly or annual payment made to an insurance company that keeps your policy active. Health insurance, life insurance, auto insurance, disability insurance, homeowners insurance, and renters insurance all require the policyholder to pay a premium to continue receiving coverage.

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Unless you’re buying term life insurance, which locks in a monthly rate for the full policy term, your premium amount usually isn’t set in stone. Most policies last for six months or a year, at which point the insurance company will reevaluate your risk and may change your rate.

While some factors that determine your premium are within your control, including the number of claims you file, many factors — like your age and location — are not. During the underwriting process, the insurance company will evaluate your current risk and set a premium amount and the policy will be activated upon your first payment.

Car insurance premiums

Car insurance premiums are incredibly variable. In addition to being determined by your age, driving history, and location, your premium can go up or down if you’re involved in any car accidents or are cited for any traffic violations, like speeding, according to insurance-comparison site Policygenius.

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