Definition:
Annualized premium is the total amount paid in a year’s time to keep the life insurance policy in force. The annualized premium amount of a life insurance policy does not include taxes and rider premiums.
Description:
When you buy a life insurance policy, you can choose the premium paying mode/ frequency like monthly, quarterly, half-yearly, or yearly. The annualized premium is the addition of all the premiums paid in every payment frequency in a policy year.
Example:
Mr. Arun purchased a term insurance policy for which he has to pay ₹1,000 every month excluding tax. So the annualized premium of his term insurance policy is ₹1,000 * 12 = ₹12,000.
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Insurance
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Premium
Premium is an amount paid periodically to the insurer by the insured for covering his risk.
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Premium Waiver Benefit
A benefit wherein the future premium payments by the insured are waived off under certain conditions is called premium waiver benefit.
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Definition: Premium paying term is the total number of years for the policy holder to pay the premium.
Definition: Policy term is normally equal to the premium paying term. However, some insurance policies give the insured the autonomy to choose a premium paying term lower than the policy term. For instance, insurers allow the insured to get the insurance benefits even if they stop the premium payments after a stipulated period of time by converting the normal insurance policy into a paid up policy.
Here the sum assured will be calculated by using the formula.
(Total number of premiums paid/Total number of premiums payable) X Sum Assured + vested bonus (if any)
Also See: Life Assured, Non-Standard Life, Premium, Adverse Selection, Subrogation, Paid-Up Policy, Mitigation
PREV DEFINITION
Premium
Premium is an amount paid periodically to the insurer by the insured for covering his risk.
Read More
NEXT DEFINITION
Premium Waiver Benefit
A benefit wherein the future premium payments by the insured are waived off under certain conditions is called premium waiver benefit.
Read More
Related News
Suggest a new Definition
Proposed definitions will be considered for inclusion in the Economictimes.com
Definition: Premium is an amount paid periodically to the insurer by the insured for covering his risk.
Description: In an insurance contract, the risk is transferred from the insured to the insurer. For taking this risk, the insurer charges an amount called the premium. The premium is a function of a number of variables like age, type of employment, medical conditions, etc. The actuaries are entrusted with the responsibility of ascertaining the correct premium of an insured. The premium paying frequency can be different. It can be paid in monthly, quarterly, semiannually, annually or in a single premium.
Also See: Life Assured, Non-Standard Life, Premium Paying Term, Adverse Selection, Subrogation, Paid-Up Policy, Mitigation
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