DEFINITION of 'Deferred Acquisition Costs - DAC'

Typically used in the insurance industry, this is when a company defers the sales costs that are associated with acquiring a new customer over the term of the insurance contract.

BREAKING DOWN 'Deferred Acquisition Costs - DAC'

Most of the sales costs arise from referral commissions to external distributors and brokers.

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RELATED FAQS
  1. What are some examples of deferred revenue becoming earned revenue?

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    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  3. What types of companies tend to have the most deferred revenue?

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    Understand what credit insurance is and how it protects companies against payment problems they may encounter in trying to ... Read Answer >>
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