The term earned premium refers to the premium collected by an insurance company for the portion of a policy that has expired. It is what the insured party has paid for a portion of time in which the insurance policy was in effect, but has since expired.
In definition, insurance premium refers to a specific amount to be paid periodically by the insured individual to maintain their insurance coverage, as calculated by the insurance company. For deciding the premium amount, an insurance company examines the type of coverage being opted, the policyholder lifestyle and health conditions, and the likelihood of a claim being made, among other factors.
For the purpose of accurate analysis of a person’s life and premium calculation, insurance companies employ actuaries. They are responsible for analyzing the risks associated with an event or claim, and then greater the risk, higher will be the insurance premium.
Paying insurance premiums
There are several options offered in terms of premium payment against your policy. Policyholders can usually pay the insurance premium in installments on a monthly, quarterly, half-yearly or annually. This premium payment frequency is called the Premium Payment Mode.
