Deferred Premium
What Does Deferred Premium Mean?
A deferred premium refers to a payment for an insurance policy that is not yet due. It can be paid on a monthly, quarterly, or semi-annual basis. This arrangement allows policyholders who are unable to pay their premiums annually to manage payments more easily.
Insuranceopedia Explains Deferred Premium
Premium payment is flexible, allowing individuals to choose the frequency with which they pay within a year. If their budget permits, they can opt for annual payments, which offer the advantage of saving on processing costs since the payment is made only once. However, if a large annual payment is burdensome, they can choose to make semi-annual, quarterly, or monthly installments. In these cases, the insurer divides the premium evenly throughout the year and charges the policyholder accordingly.
Monthly premium payments are a common choice, but they can be the most expensive option when accounting for the additional cost of processing 12 payments.
