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Compensating Balances Plan

Definition of "Compensating balances plan"

Gobind Anand
  Bay Area Real Estate Expert

Premium paid by an insured business to an insurance company from which the company subtracts charges for the cost of putting a policy on its books, premium taxes, and profit. The remainder of the premium is deposited in the insured business's bank account from which the insured business can make withdrawals.

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