If premium is given in percentage how to calculate it?

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How to Calculate Premium Given in Percentage?

When purchasing insurance policies, the premium is the amount of money that you need to pay periodically to keep the policy active. The premium can be calculated in various ways, but one of the common methods is to express it as a percentage of the sum assured or the insured amount. Here's how to calculate the premium given in percentage:

Step 1: Determine the Insured Amount

The insured amount is the maximum amount that the insurer will pay in case of a claim. It is also called the sum assured. For example, if you are buying a life insurance policy with a sum assured of $100,000, then that is your insured amount.

Step 2: Determine the Premium Rate

The premium rate is the percentage of the insured amount that you need to pay as the premium. For example, if the premium rate is 2%, then you need to pay $2,000 as the premium for a sum assured of $100,000.

Step 3: Calculate the Premium

To calculate the premium, you need to multiply the insured amount with the premium rate. For example:

Premium = Insured amount x Premium rate

Using the same example as before, the premium would be:

Premium = $100,000 x 2% = $2,000

Step 4: Pay the Premium

Once you have calculated the premium, you need to pay it to keep the policy active. The premium can be paid annually, half-yearly, quarterly, or monthly, depending on the policy terms and conditions.

Conclusion

Calculating the premium given in percentage is a straightforward process. You need to determine the insured amount, the premium rate, and then multiply them to get the premium amount. By understanding how to calculate premiums, you can make an informed decision while buying insurance policies.

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F premium s given n percentage then, first of all, u have to calculate the amount of premium from the total goodwill of the firm and after that do the question ordinarily.

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Apply the percentage on the face value of share or debenture

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