The basic premium factor is the acquisition expenses, underwriting expenses, profit, and loss conversion factor adjusted for the insurance charge for a policy. The basic premium factor is used in the calculation of retrospective premiums and does not consider account taxes or claims adjustment expenses.
What is basic premium in insurance?
Basic Premium — the underwriting and administrative expense component of premium; amounts required for adjusting of expected losses (see unallocated loss adjustment expenses (ULAE)). It is added to the pure premium to produce the standard premium. In life insurance, the basic premium also includes agent commissions.
What are basic factors used to compute life insurance premiums?
1. Lump sum: Pay the total amount before the insurance coverage starts. 2. Monthly: Monthly premiums are paid monthly.
Which are the two types of premium?
Reward or extra return for taking risk or exposure to factors. Factor investing is a way of earning premiums by taking exposure to factors. Robeco wants not only to document certain statistical patterns, but also to find the underlying explanation for these factors.
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