A portion of the life insurance policy premium that is used to buy coverage. For example, if a policyholder has paid for a year’s worth of life insurance coverage, but has only had a policy for three months, then the insurance company has only earned three months worth of premium. The nine months of premium is set aside and counted as “unearned premium”. Unearned premium may be included alongside policy values, for accounting purposes, as “premium refund credits” until such time as those premiums are fully earned.
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