Premium

Definition

• The amount paid by the insured to the insurer for insurance coverage, as set in the insurance policy. Premiums are paid to compensate the insurer for taking on liabilities and risk.

Synonyms
insurance premium, premium payment, annuity premium

Related Terms and Acronyms

• Accommodation Line — Definition,
  • As a favour to a broker, insurance companies will sometimes approve coverage to an individual who would not otherwise qualify.
• Annuity — Definition,
  • A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
  • A financial instrument that disperses a number of payments over a set period of time.
• Annuity Consideration — Definition,
  • The payment(s) made by an individual in order to accumulate value in an annuity.
• Attained Age — Definition,
  • The current age of an insured individual.
• Declining Life Insurance — Definition,
  • Life insurance with a decreasing death benefit, often used to insure mortgage debt.
• Developed to Net Premiums Earned — Definition,
  • A method used to determine if the premiums charged by an insurer are in balance with the benefits they pay out.
• Earned Premium (EP) — Acronym,
  • The amount of premiums that an insurer has collected from an insurance policy at a given time.
• First Dollar Coverage — Definition,
  • Insurance coverage that does not require the insured to pay a deductible.
• Fixed Expenses (FE) — Acronym,
  • Fixed business costs that do not change regardless of business volume, such as property rental, insurance payments, utilities, etc.
• Fixed Premium — Definition,
  • Insurance or annuity premiums that stay level for a specific period of time.
• High Deductible Health Plan (HDHP) — Acronym,
  • Health plans with high deductibles and low premiums.
• Incurred But Not Reported (IBNR) — Acronym,
  • An estimate of how much an insurance company owes to policyholders for losses that have already occurred but have not yet been reported.
• Instalment — Definition,
  • The regular periodic payment that a borrower agrees to make the lender.
• Insurance (insur) — Abbreviation,
  • An arrangement where one party provides financial protection to another party for specific damages or losses.
• Insurance Policy — Definition,
  • A legal contract between an insurer and entity that specifies what the insurer is required to cover and any benefits the insured entity is entitled to.
• Mortality and Expense Risk Charge — Definition,
  • A charge sometimes applied to reimburse an insurer for the risks in a policy.
• Paid-up Additional Insurance — Definition,
  • The option for a policyholder to purchase additional insurance coverage with additional premiums or policy dividends.
• Policy Declarations — Definition,
  • The section of the insurance policy that declares the specifics of the insurance policy including premiums, named perils, and policy limits, amongst others.
• Policyholder Dividend Ratio — Definition,
  • A ratio comparing the dividends paid to policyholders to net premiums earned by the insurer.
• Policyholder Surplus — Definition,
  • A method of determining an insurance company's relative financial strength by finding the difference between the company's assets and liabilities.
• Pre-paid Insurance — Definition,
  • A insurance policy where insurance premiums are all paid in advance, normally offered in one year terms.
• Premium Balances — Definition,
  • A ledger kept by insurance companies recording insurance premiums.
• Premium-to-Surplus Ratio — Definition,
  • A method used to determine an insurance company's financial stability.
• Premiums Written — Definition,
  • A sum of the premiums from all the policies that a company has written in a given period of time.
• Reinsurance — Definition,
  • The process of one insurance company sharing liabilities from an insurance policy with another insurance company in order to lessen exposure, or in other words, insurance for insurers.
• Underlying Retention — Definition,
  • The liability an insurance company still retains after ceding liability to a reinsurer.
• Underwriting (UW) — Acronym, Important,
  • The analysis of risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves evaluating the property as outlined in the appraisal report, and also evaluating the borrower's ability and willingness to repay the loan.
  • Assessing individuals for eligibility and issuing and distributing a financial product such as insurance, equity capital or credit.
• Underwriting Guide — Definition,
  • The rules and guidelines an underwriter must follow while writing policies.
• Unearned Premium — Definition,
  • Premiums that have not yet been collected from an insurance policy.
• Utilization — Definition,
  • How frequently a policyholder makes use of their insurance policy.
• Vanishing Premium Policy — Definition,
  • A life insurance policy where policy dividends are used to pay the policy's premiums.
• Variable Universal Life Insurance (VULI) — Acronym, Important,
  • A form of life insurance with adjustable premiums, flexible investment options, and tax efficiency.
• With-Profits Policy — Definition,
  • Insurance that pays the policyholder a portion of the insurer's profits.