Definition - What does Advance Premium mean?
Advance premium is payment made by the insured to the insurance company before the specific date of payment. It can also refer to the first payment to a policy which actual premium value has not yet been calculated.
Insuranceopedia explains Advance Premium
Payment made in advance or before the payment schedule is done because the insurance company might have an incentive for the policyholder upon doing it, such as a discount on the actual premium price.
It can also be about the first payment for a policy. The payment is just based on an estimate since valuation of the coverage has not been completed. This is done to bind the insurer to the insured. The adjustments or the actual premium value comes out in the notice for the second premium payment. This is also called as the deposit premium.
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