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Unearned Premium

   Also found in: Dictionary/thesaurus, Medical, Legal, Encyclopedia, Wikipedia 0.01 sec.
Unearned Premium
A premium paid on an insurance policy before it is due. For example, one may pay six months' worth of premiums in January instead of paying each month from January to June. If the policyholder cancels before February, the insurer should refund the premiums for March, April, May and June. For that reason, they are listed as liabilities on the insurer's balance sheet.


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The couple, though, paid the loan off in July 2007 and said they were legally entitled to a refund of the unearned premium, which they never received.
The recognition approach for a claim liability relating to a financial guarantee insurance contract requires that an insurance enterprise recognize a claim liability when the insurance enterprise expects, based on the present value of expected net cash outflows to be paid under the insurance contract discounted using a risk-free rate, that a claim loss will exceed the unearned premium revenue.
50 Panel 2--Premiums-earned calculation Year 1 Year 2 Year 3 Year 4 80% unearned premium (start of year) -- $1,200.
 
 
 
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