Adjusted Premium

Filed Under » ,
Dictionary Says

Definition of 'Adjusted Premium'

An adjusted premium is the premium of a life insurance policy that is adjusted by amortizing the costs associated with acquiring the insurance policy. The adjusted premium is equal to the net-level premium plus an adjustment, to reflect the cost associated with the first year initial acquisition expenses.

The adjustment to the net-level premium is an amortization of the expenses associated with establishing the initial insurance policy. The net-level premium is the total cost of the policy (from inception to payout), divided by the number of years the policy is expected to be in force. This term is specific to life insurance companies.
Investopedia Says

Investopedia explains 'Adjusted Premium'

The adjusted premium is important for life insurance companies to calculate, as it is the premium used to figure the minimum cash surrender value (CSV). All life insurance policies are required to calculate a CSV due to the Nonforfeiture Provision, which means that the life insurance policy always has a value, even when the policy holder chooses not to use it for its original purpose (payout upon death).

The CSV is the value that could be received by terminating the policy and choosing to "cash-out." The insured is entitled to other choices under the provision, including taking a loan against the policy using the cash value as collateral.

Articles Of Interest

  1.

    How An Insurance Company Determines Your Premiums

    Find out how insurers use credit history to build an insurance score and how it could affect your bottom line.

  2. Getting the Whole Story on Variable Annuities

    Variable annuities are another way to save money tax-deferred - but don't jump in blindly!

  3. Variable Vs. Variable Universal Life Insurance

    Do you know why you might need one policy versus the other? Read on to find out.

  4. 15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.

  5. 5 Things You Should Know About The New Health Insurance Marketplace

    Here are five things you should know about the new Health Insurance Marketplace (AKA Health Insurance Exchange), which launches on October 1.

  6. Get An Academic Finance Career

    Working nine months a year and earning a six-digit salary might seem like the high life, but these jobs are not easy to come by.

  7. Top 5 Budgeting Questions Answered

    You don't need a degree to understand your money, begin saving and pay down debt.

  8. Tax Variations Of The HEART Act

    The HEART Act is designed to allow service members and reservists make a smooth financial transition into active duty and back into civilian life.

  9. 8 Qualities That Make A Good Insurance Agent

    Insurance agents must possess each of the following qualities in order to be successful.

  10. Can my insurance company refuse me coverage?

    Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:Non-Renewal An insurance company is not obligated to renew an insurance policy ...
comments powered by Disqus
Marketplace
Hot Definitions

  1. Racketeering

    Racketeering refers to criminal activity that is performed to benefit an organization such as a crime syndicate. Examples of racketeering activity include...

  2. Lawful Money

    Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves.

  3. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade outside quoted ranges, when an exchange determines that market movements are so sharp that quotes cannot be kept current.

  4. Absorption Rate

    The rate at which available homes are sold in a specific real estate market during a given time period.

  5. Yellow Sheets

    A United States bulletin that provides updated bid and ask prices as well as other information on over-the-counter (OTC) corporate bonds...

  6. Bailment

    The contractual transfer of possession of assets or property for a specific objective.
Trading Center