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
Figure used in calculating a worker's primary insurance amount (PIA) to determine Social Security benefits in the following manner: calculate the number of years between the worker's ...
Provision found in current assumption whole life insurance policies under which the insurance company retains the contractual right to recalculate the premium (after a minimum period of ...
Requirement of state approval of property insurance rates and policy forms before they can be used. Individual states regulate insurers and approve their rates. There are three methods of ...
Eligible rollover distribution that is paid directly from an employee's employee benefit insurance plan to the employee's individual retirement account (IRA) or to another plan maintained ...
Pre-determined dollar amount up to which an insurance policy will cover an insured each year, regardless of the number of claims submitted or defense costs associated with these claims. For ...
In health insurance, the number of days for which benefits are paid to the named insured and his or her dependents. For example, the number of days that benefits are calculated for a ...
Bonds sold at a discount from their face value; accumulated interest paid at maturity, as in the case of zero coupon bonds. Interest rate minimum is guaranteed with the prevailing interest ...
Expense of recovering property by a salvor. Salvage charges are not provided for in insurance contracts. If the owner and the salvor cannot agree on salvage charges, a court makes a ...
Plan to which contributions are not being made, but which has not been formally terminated. The freezing of a keogh plan (hr-10) may occur in the following circumstances: self-employed ...
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