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What does Annual Premium mean?

Updated: 9/15/2023
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13y ago

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This is the amount paid the policyholder on an annual basis to cover the cost of the insurance policy being purchased. In effect, it is the primary cost to the policyholder of transferring the risk to the insurer.

Important to keep in mind, though, is that this will not be the only cost incurred to maintain the insurance. Depending upon the type of coverage involved, there may be deductibles and copayments, which are forms of cost-sharing between the insured and the insurer.

A deductible is the amount that the insured must pay toward a covered claim before the insurer's obligation to pay is triggered. For example, if one maintains a $250 auto collision deductible, the insured is responsible for the first $250 in repair costs for a covered claim.

A copayment is a type of cost sharing frequently found in health insurance policies, although deductibles also exist there. A copayment is the percentage of a covered claim for which the insured is responsible once the deductlble has been met.

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Related questions

What is the formula for annual premium?

Annual Premium= Annual Base Premium * Driver-Rating Factor To get annual base premium the formula is... Annual base Premium= Liability Premium + Collision Premium + Comprehensive Premium.


What is the difference between annual premium and installment premium?

The annual premium is paid once a year and the installment premium is usually paid monthly and usually has additional fees added which costs more than the annual premium.


What best describes gross annual premium?

In fact, gross annual premium includes tax element including service tax charged on premium amount.


What is the annual premium if the base premium is 212.15 and the rating factor is 1.65?

$350.05


Which term is defined as the payment an insured makes to the insurance company on a regular schedual?

that is the insurance premium (can be monthly, quarterly, semi-annual or annual premium).


What are some different types of insurance terms?

The different types of insurance terms are "Annual renewable term" and "Level premium term." The Annual renewable term usually has the lowest annual premium to start and the Level renewable term lets you lock in your premium for that period.


Colin has a full comprehensive premium of 32.00 and a 50.00 deductible collision premium of 120.40 His rating factor is 1.35 What is his annual premium?

205.74


If there is a policy that is three months old and you cancel it will there be any money back?

Depends on the mode of premium...that is, did you pay an annual (yearly) premium, a semi-annual, quarterly or monthly premium? Whichever mode you used, the insurance company will (should) refund the "unearned" amount you paid. For instance, if you paid an annual premium (12 months), and you cancel after just three months of coverage, then you should receive a refund equal to nine (9) months woth of premium, etc.


What does ceded insurance premium mean?

What does ceded premium mean


What is the accounting journal entry to record financed annual insurance premium?

Debit annual insurance premiumCredit cash / bank


Kamil has a full comprehensive premium of 67.10 and a 50.00 deductible collision premium of 201.20 what is his annual base premium?

$268.30 7/7/10 Pace high school


Jacques has a full comprehensive premium of 47.60 and a 50.00 deductible collision premium of 154.00 What is his annual base premium?

$201.60 7/7/10 pace high school