Life · Chapter 6 · Premiums
Net Premium vs Gross Premium
Definition
Net (single) premium = mortality cost + interest only. Net level annual premium = the amount needed annually to fund future benefits. Gross premium = net premium + insurer expenses — the amount the owner actually pays.
Exam tip
Gross = Net + Expenses. The net premium does NOT include the expense (loading) factor.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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