Insurance premium represents payment for insurance, paid by virtue of the law in the case of compulsory insurance or voluntary insurance under the terms of the agreement by which the insurance fund is formed.
Insurance premium as a concept, according to its content, has three manifestations:
- legal - manifested in a specified pre-monetary liability insurance, which is confirmed by the insurance contract concluded between the parties;
- economy - acting as a part of national income released by the insured to ensure that the interests of the adverse or undesirable effects of possible adverse events (insurance cases);
- math - is expressed in the form of recurring periodic payments to the insurer by the insured.
cost of insurance services is shown in the amount paid by the policyholder to the insurer of the insurance premium, that is, in other words, is the cost of the insurer's services provided to them in the event of the customer insured event.Calculation of insurance premium is made under the insurance rate.Legally insurance rate is defined as the rate of insurance premium to the insurance object or a unit of the insurance sum.
insurance premium should have a value sufficient to:
- cover expected claims during the insurance period;
- creation of insurance reserves;
- cover the costs of the insurance companies in the conduct of affairs;
- ensure a certain profit margin.
that part, which is formed by the insurance fund, that is dedicated exclusively to insurance benefits, called the net premium, is a part, aimed at carrying out insurance to cover the costs of the insurer - load.Net premiums, so is the cost of insurance, excluding the costs of the review, available at the insurer.In fact, the insurance premium - a combination of net premiums and the load it is called gross premiums.
Types of insurance premium
various technical aspects of the insurance premium are characterized by different concepts.
By appointment it is divided into:
- risk premium intended to cover the risk;
- cumulative contribution, which is present in the contracts of life insurance and the insurer covers the payments when the insurance term expires;
- net premium, which covers insurance payments for a specific period of time on a certain type of insurance;
- sufficient contribution equal to the amount of load and net premiums, which are included in the cost of the insurer;
- tariff rate insurer, consisting of adequate contributions, as well as the allowances needed to cover costs related to the various preventive measures, promotion and advertising, and more.
By the nature of the risk premium is classified into life, which covers the risk for a particular period of time, and a fixed, not changing with time, that is a constant.
Insurance premiums are divided on the form of payment to:
- lump sum that is fully paid by the insured during the insurance in advance;
- current fee - is a certain portion of the lump sum award as part of the commitments made by the insured against the insurer;
- Deferred bonus - a lump sum award is divided into annual, which takes into account the economic opportunities of the insured, and she, in turn, can be divided into monthly, quarterly, half-yearly (in equal parts).
Insurance premiums can be divided as at the time of payment, upon the balance sheet of the insurance company and the largest.