07
Feb
Insurance Premium Definition Economics. The total amount of premium paid annually is called the annualized premium. If you skip your premium payment the insurer will eventually drop your healthcare. The premium is collected in advance by the insurer but the insurer needs to pay back the premium to the insured in the event of cancellation of the policy. Insurance is a form of risk management primarily used to hedge against the risk of a contingent loss.
Premium can be paid monthly quarterly semi annually and annually. Health insurance covers the sometimes extraordinary costs of medical care. It is the actual amount of money charged by insurance companies for active coverage. Insurance is a form of risk management primarily used to hedge against the risk of a contingent loss. The premium is collected in advance by the insurer but the insurer needs to pay back the premium to the insured in the event of cancellation of the policy. Life insurance offers protection against the economic impact of an untimely death.
For taking this risk the insurer charges an amount called the premium.
As this is an unearned income the same is treated as a liability in the balance sheet of an insurance company. If somebody is risk averse then they are willing to pay a risk premium in order to avoid the risk usually in order for someone else to bear the risk in the form of insurance. As this is an unearned income the same is treated as a liability in the balance sheet of an insurance company. Loaded premium To provide for expense taxes and profit and for some. Those who satisfy this need for insurance insurance companies for example do so because they can pool risk. It is the actual amount of money charged by insurance companies for active coverage.