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Simple English definitions for legal terms
paid-in fund
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A quick definition of paid-in fund:
A paid-in fund is a reserve cash fund set up by a mutual insurance company to pay for unexpected losses. It is like a savings account that the company uses instead of having a capital stock account.
A more thorough explanation:
Definition: A reserve cash fund established by a mutual insurance company to pay unforeseen losses. The fund is in lieu of a capital stock account.
Example: A mutual insurance company sets up a paid-in fund to cover unexpected losses that may occur. This fund is created by the contributions made by policyholders and is used to pay claims that exceed the company's regular reserves. The paid-in fund is an alternative to a capital stock account, which is used by other types of insurance companies to cover losses.
Explanation: The paid-in fund is a type of reserve fund that is established by mutual insurance companies. It is used to cover losses that are not covered by the company's regular reserves. The fund is created by the contributions made by policyholders, and it is managed by the company's board of directors. The paid-in fund is an important source of financial stability for mutual insurance companies, as it helps them to cover unexpected losses without having to rely on external sources of funding.