Q:
What is the definition of annual premium?
A:
Quick Answer
An annual premium is defined as the amount that someone is required to pay each year in order to keep his or her insurance policy active. If the insured person does not pay the premium amount by the policy's specified due date, the policy is cancelled. Some insurance companies offer a grace period after the due date, and if the premium is paid in this time frame, the policy is reinstated.
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Full Answer
Many companies allow customers to split the annual premium into monthly or quarterly installments for a fee. For example, if the annual premium is $1,200, the customer may pay $100 each month or $300 each quarter, plus any applicable fees.
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