Unearned Premium

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Unearned Premium Amount of premium for which payment has been made by the policyholder but coverage has not yet been provided, or in other words that portion of the policy premium that has not yet been "earned" by the insurance company because the policy still has some time before it expires. For example, if an insurance policy has a one-year term and the premium is $1,000, then the unearned premium after six months would be $500. This is because the insurance company has only assumed risk for six months of the one-year policy term. With unearned premium reserve all premiums (fees) received for coverage extending beyond the statement date; appears as a liability on the balance sheet. In certain circumstances, an insurance company may not have to issue a refund for unearned premium. Unearned premiums are an important part of the insurance industry. They represent a liability for insurance companies, but they can also be a source of income. The amount of unearned premium can vary depending on a number of factors, such as the type of insurance policy, the length of the insurance policy term, the amount of the insurance premium, and the time of year when the insurance policy is issued. Provisions in the insurance contract govern the terms for unearned premium. In certain circumstances, an insurance company may not have to issue a refund for unearned premium. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

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