Gross Premium Law and Legal Definition

Gross premium consist of the net premium plus loading for expenses and contingencies. The term net premium refers to the cost of the insurance, that is, the amount required on an actuarial basis to carry the risk.

Thus, the term gross premium, or the amount charged in the contract of life insurance, ordinarily include two elements, that is, the net premium and the loading. The loading or the amount arbitrarily added to the net premium is intended to cover the expenses of the company. In a stock company it may also be a source of profit and in a mutual company, a source from which dividends may be paid to the insured. [Fox v. Mutual Ben. Life Ins. Co., 107 F.2d 715, 717 (8th Cir. Mo. 1939)].