Premium Discount Plan

Definition of "Premium discount plan"

Kimberly Graziadei
Kimberly Graziadei Berkshire Hathaway HomeServices New Jersey Properties

Plan whereby adjustments are made in the premium, as the premium increases to reflect the non proportionate increases in expenses. Generally, the expenses of acquisition costs, administrative costs of placing the policy on the insurer's books, taxes, and claims do not increase in proportion to the increase in the premium. Thus, the gross premium should not reflect a proportionate increase in expenses as the net single premium increases.

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