Aditya Birla Sun Life Insurance Company Limited

Policy Premium Component

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Definition

A policy premium is the amount of money paid towards the life insurance policy. The policy premium component comprises pure premium, operating expenses, investment and earning margin.

Description:

The premium is paid by the insured and the life cover is provided by the insurance company. Under insurance the risk is transferred from one party to the other after paying the premium. The policy premium is made of three components to include.

  • Pure premium: Pure premium is the most important component of the insurance. It is the amount needed to cover expected losses and loss adjustment expenses.

  • Operating expenses:: Operating expenses is the premium component that include sales commission, claim handling costs, taxes and other marketing costs.

  • Investment and Earning margin: It includes the allowance for contingencies and underwriting profits.

Example:

Manav paid a premium of Rs.8500/- including GST. The premium included operating expenses of Rs.700/- and investment and earning margin of Rs.980/-. The remaining amount consists of premium and taxes.

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ABSLI Salaried Term Plan

Exclusively For Salaried Individuals

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4 Plan Options

Icon-Whole life cover

Life Cover upto 70 years

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Optional Accelerated Critical Illness benefit

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Inbuilt Terminal Illness Benefit

Life Cover
₹1 crore

Premium:
₹508/month*

ABSLI Salaried Term Plan (UIN:109N141V02) is a non-linked non-participating individual pure risk premium life insurance plan; upon Policyholder’s selection of Plan Option 2 (Life Cover with ROP) this product shall be a non-linked non-participating individual savings life insurance plan.
*LI Age 21, Male, Non Smoker, Option 1: Life Cover, PPT: Regular Pay, SA: ₹ 1 Cr., PT: 10 years, Annual Premium: ₹ 6100/- ( which is ₹ 508.33/month) Premium exclusive of GST. On death, 1 Cr SA is paid and the policy terminates.
ADV/8/22-23/1211