Written "amounts payable" for insurance coverage are called:

Question

Options

• AGross premiums
• BNet premiums
• CDeposited premiums
• DEarned premiums

• A
  83% (19)
• B
  4% (1)
• C
  13% (3)

Explanation

Gross premiums are the total amounts written (recorded) as payable by policyholders when an insurance policy is issued, making option A correct - they represent the full premium charged, including the pure cost of risk plus all expense loadings, profit margins, and other charges.

Net premiums (B) are wrong because they refer to the actuarial cost of coverage alone - the pure risk component stripped of expense loadings, not the full written amount a policyholder owes. Deposited premiums (C) refer to initial advance payments in retrospective or deposit-based rating plans, not the standard written charge for coverage. Earned premiums (D) are wrong because they describe a timing concept - the portion of a written premium that corresponds to coverage already provided as time elapses - not the original amount payable at policy issuance.

Memory tip: Think of "gross" as the whole enchilada - the gross amount written on the policy before anything is broken down or allocated. If you see "written" + "payable" together, that's the gross premium.

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