Simple English definitions for legal terms
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A net premium is the amount of money that a person pays to keep their insurance policy active. It is the portion of the premium that covers the estimated cost of claims and does not include additional expenses or commissions. The net premium for life insurance is calculated using an assumed interest and mortality-table rate. Earned premium is the portion of the premium that has already expired, while unearned premium is the portion that has not yet occurred.
Definition: The amount of money required to keep an insurance policy in effect, after deducting agent commissions and expenses.
Examples:
These examples illustrate how the net premium is calculated and how it differs from other types of premiums, such as earned and unearned premiums. The net premium is the amount of money needed to provide benefits under an insurance policy, after deducting agent commissions and expenses.