Glossary
Down Payment
The initial payment an insured makes to put a policy in force, with the balance paid through instalments or premium finance.
The down payment is what binds coverage under an instalment or financed arrangement — typically a stated percentage of the annual premium, collected before the effective date.
It frequently generates the first commission transaction on a policy, at a proportion that does not match the full-term commission rate. Reconciling it requires knowing the payment plan, not just the premium and the schedule.
See also
- Installment Plan — A carrier-offered schedule allowing an insured to pay premium in periodic instalments rather than in a single payment.
- Premium Finance — A lending arrangement in which a third party pays a policy's premium up front and the insured repays it in instalments w…
- Effective Date — The date on which coverage under a policy or endorsement begins.