What is a premium income?

premium income generally refers to the money that the insurance company receives by billing bonuses to clients. This money is not all considered as a profit, because this money must also be paid demands, as well as administrative expenses. However, it is one of the primary sources of income for many insurance companies together with investment income. The bonuses are generally regulated by the control body and therefore cannot be generally excessive or outside a certain range for this sector and protection offered.

Insurance companies generally calculate premium incomes at the end of the year due to changes that a policyholder could make during the year. For example, if the client subscribes policy, then cancels this policy, the unused part of the bonus is generally referred to as a unearized bonus. This part is often returned to a person who paid premiums, minus any administrative fees.

As can be expected, Premium income is the main source of income for the insurance company. The only reason for existence is chargedThe premiums and coverage of the loss that are referred to as claims. Income is therefore vital for the overall operations of the insurance company. While other sources of income are important, they are generally based on money obtained from premium collections.

As an example of how bonus income affects other income flows, see the investment income. There is no more money to invest without receiving a premium income. Therefore, everything begins with a collection of premium. In addition, the revenue of these premiums must realize all expenses or the company could face loss, especially if other sources of income do not equal the costs.

To determine what the intake of premium income can be or should be for a given rocjaké any start of projections. These projections are more accurate because of the law of the law because the company adds more policyholders. In other words, the greater the number of people in the pool, the predictable theThe losses happen. The amount is calculated and the bonus is evaluated.

In general, a premium income is based on annual numbers, although some companies can make monthly payment plans easier for clients. Overall, the aim is to ensure that at the end of the year the income from premiums and other sources meet or exceed the costs incurred. This is determined by the view of the balance sheets at the end of the year.

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