Types of Premiums

Arriving at the rate is performed by an Actuary

Office Premium

This rate printed in the tables of insurance companies. These are typically level premiums which need to be paid every year.

Risk Premium

Premium is charged to meet the claim for the yar.

          Risk Premium = Mortality Rate x Sum Assured

Level Premium

Equal premium charge for entire term of the policy

Net Premium

The interest earned is also considered for the premium calculation.

          Net premium = Premium-Interest Earnings.

Gross Premium

          NET PREMIUM+LOADING FOR EXPENSES+LOADING FOR  CONTINGENCIES + BONUS LOADING

Higher for mortality rate, higher the premiums would be.

Higher the interest rate assumed, lower the premium.