Unearned Premium Reserve
Fund that contains the portion of the premium that has been paid in advance for insurance that has not yet been provided. For example, if a business pays an annual premium of $1000 on January 1, the money is not earned by the insurer until the insurance coverage has been provided. On July 1, $500 would have been earned and $500 would remain as unearned premium, belonging to the policyholder. If either party cancels the contract, the insurer must have the unearned premium ready to refund. For this reason, insurance regulators require that insurers maintain an unearned premium reserve so that, in the event an insurer must be liquidated, there is enough money to pay claims and refund the unearned premium. Because computations for individual policies would be cumbersome, regulators have devised formulas for figuring unearned premium reserves.
Popular Insurance Terms
Premiums paid with funds that are not borrowed from life insurance. It is important to ascertain the finance charges and the costs/benefits of such a transaction. ...
Discharge of electricity from the atmosphere, one of the perils covered in most fire insurance policies. ...
Earliest age at which an employee can retire without a penalty reduction in pension benefits after having reached a minimum age and served a minimum number of years with an employer. ...
For loss of an obligee in the event that the principal fails to perform according to standards agreed upon between the obligee and the principal. ...
Arguments composed of assumption of risk, contributory negligence, and fellow servant rule. ...
Type of mutual insurance company that requires a substantial initial premium payment. After the initial premium payment is made, future premium payments required will be paid from the ...
Written statement by an insurance company attesting to the powers it has vested in an agent. ...
Arrangement, often funded by life insurance, to continue an employee's salary in the form of payments to a beneficiary for a certain period after the employee's death. The employer itself ...
Person other than the annuitant as designated by the policyholder on whose life expectancy the annuity payment is also based. ...
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