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Unearned premium — Premium is earned as time passes and coverage is provided. After three months of an annual policy, the earned premium covers the three months during which the policy was in force, and the unearned premium covers the remaining nine months during which coverage will no longer be provided. The unearned premium is generally returned to the policyowner as a refund upon cancellation, subject to the policy's terms and any surrender charges. Gross premium is the total amount charged for the policy, and loading is the expense and profit component built into the premium, neither of which describes the refundable portion.

National insurance concept

Mortality, expenses, and investment earnings — Life insurance premiums are calculated from three components: mortality, which is the cost of death claims based on mortality tables; expenses, which are the insurer's costs of operations, commissions, and administration; and investment earnings, which are the interest the insurer earns on reserves and cash values and which offsets the other costs. The mortality charge increases with age, expenses include acquisition and ongoing costs, and the investment return reduces the net premium the insured must pay. This three-factor structure is fundamental to life insurance pricing.

National insurance concept