PREMIUM
premium, n. 1. The periodic payment required to keep an insurance policy in effect. — Also termed insurance premium. [Cases: Insurance 2000.C.J.S. Insurance §§ 436–437.]
advance premium. A payment made before the start of the period covered by the insurance policy. [Cases: Insurance 1760.]
earned premium. The portion of an insurance premium applicable to the coverage period that has already expired. • For example, if the total premium for a one-year insurance policy is $1,200, the earned premium after three months is $300. [Cases: Insurance 2000. C.J.S. Insurance §§ 436–437.]
gross premium. 1. The net premium plus expenses (i.e., the loading), less the interest factor. See LOADING; INTEREST FACTOR. [Cases: Insurance 1127, 2005. C.J.S. Insurance §§ 48, 438–439.] 2. The premium for participating life insurance. See participating insurance under natural premium. The actual cost of life insurance based solely on mortality rates. • This amount will be less than a net premium. See net premium.
net level annual premium. A net premium that stays the same each year.
net premium. 1. Generally, the premium amount for an insurance policy less agent commissions. [Cases: Insurance 1652, 2000. C.J.S. Insurance §§ 205, 436–437.] 2. The portion of the premium that covers the estimated cost of claims. 3. The money needed to provide benefits under an insurance policy. • The net premium in a life-insurance policy is calculated by using an assumed interest and mortality-table rate; it does not include additional expense amounts that will be charged to the policyholder. — Also termed net valuation premium.
net single premium. The money that must be collected from a policyholder at one time to guarantee enough money to pay claims made on an insurance policy. • This amount assumes that interest accrues at an expected rate and is based on a prediction of the likelihood of certain claims.
[Cases: Insurance 2037. C.J.S. Insurance §§ 518–519, 742–745, 749–754.] net valuation premium.See net premium.
unearned premium. The portion of an insurance premium applicable to the coverage period that has not yet occurred. • In the same example as above under earned premium, the unearned premium after three months is $900. [Cases: Insurance 1371, 1930, 2046. C.J.S. Insurance §§ 500–501.]
2. A sum of money paid in addition to a regular price, salary, or other amount; a bonus. 3. The amount by which a security’s market value exceeds its face value. — Also termed (specif.) bond premium. Cf. DISCOUNT(3).
control premium. A premium paid for shares carrying the power to control a corporation. • The control premium is often computed by comparing the aggregate value of the controlling block of shares with the cost that would be incurred if the shares could be acquired at the going market price per share. [Cases: Corporations 174. C.J.S. Corporations § 312.]
4. The amount paid to buy a securities option. — Also termed (in sense 4) option premium.
[Blacks Law 8th]