DEFINITION of 'Advance Premium'

The initial premium paid to bind an insurance policy for a given period of time. The most commonly known use of the term "advance premium", is with respect to fluctuating insurance payments, such as payroll-based policies, where the actual amount due is not known until after the fact.

BREAKING DOWN 'Advance Premium'

Advance premium can also refer to pre-paid premiums, where the policyholder makes a premium payment before it is due.

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