Basic Premium

Published: | Updated: July 23, 2017

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Definition - What does Basic Premium mean?

A basic premium refers to the portion of the standard premium meant for agent commissions and administrative costs.

Insuranceopedia explains Basic Premium

Insurance companies calculate premiums to cover underwriting costs, agent commissions, future claims, and other expenses and potential losses that may result from issuing an insurance policy. The insurer adds the basic premium to the pure premium to arrive at the standard premium.


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