The premium shown on the Policy Schedule is the minimum and deposit premium for this policy for the full policy term. On the expiry of each period of insurance the premium shall be calculated at the rate quoted on the total sum insured or the total of the values declared or deemed to have been declared. If the final premium is less than the minimum and deposit premium, the minimum and deposit premium will apply, with no return premium payable to the Insured. If the final premium is greater than the minimum and deposit premium, the Insured shall pay the difference.

Eg – Est. Annual t/over – $1mil – – rate = 0.10%

Min/dep Prem @ say 80% = $1m x 0.10% x 80% = $800

Actual t/over = $1.1m

Adjustment = $1.1mil x 0.10% = $1,100 less $800 = $300

However, if the actual t/over is less than $800k then no refund is given.

When the policy has a Minimum and Deposit premium, because the premium charged is the minimum, there is no return premium allowed if the year end declaration is less than the original estimate. However,  insurers can still charge an additional premium if the year end declaration is greater than the original estimate.

What happens if I cancel a policy that is arranged on a minimum and deposit basis?

There is no return premium allowed on cancellation as the premium is the minimum.

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