What is the deferred bonus?
insurance contracts protect people and businesses from risks or losses. Some examples include vehicle insurance, health, property and even life. Premium is the price that the consumer or business pays the insurance company for a specific amount of coverage. Some insurance companies offer insurance contracts with deferred bonus. Within the policy of the postponed premium, the buyer is able to pay the bonus in installments over time, instead of paying the entire cost in one of the thoracic sun.
Each insurance company calculates a premium for policy holders based on the level of risk. For example, a driver with numerous traffic offenses brings more risk than a very safe driver, and therefore usually pays a higher bonus. The exact process of determining these bonuses is left to mathematical specialists who specialize in mathematics related to the risk of insurance.
On the basis of a standard insurance agreement with a flat -rate sum, the buyer must pay the entire bonus in advance. If the insurance company offers a foldedBreasts, buyers can now use insurance coverage, but pay the bonus in installments. These installments are calculated by dividing the total amount of the bonus with the total number of payments. Delayed bonuses can be paid by a half -year, quarterly or monthly base depending on the company's policy and the customer's credit value. In general, insurance companies add a fee to each postponed payment that helps to cover the administrative costs associated with the processing of these payments.
buyers and sellers can benefit from deferred premiums. The buyer is able to expand their payments over time, rather than spend a large amount of money at a time. He also immediately enjoys coverage and protection, instead of waiting for the entire amount of the bonus. Delayed insurance policy can also help insurance companies sell more Policies because customers are better equipped to allow these installments to afford rather than a flat ratethe amount of the amount. This helps to spread the risk of a wider group of people, which can reduce costs for all involved.
Delayed insurance insurance contract may have important tax and insurance consequences. While the laws and codes differ according to the location, many tax standards require that the enterprise to record deferred bonuses as income only if the coverage is provided for this particular period. For example, a company that charges the customer a month for an annual policy must only recognize one twelve of the total premium cost of the accounting records of each month. Business does not have to record the entire bonus cost as an income by the end of the year.