Payment Modes calculate based upon a modal which is applied to the annual premium to determine the amount due for each payment period.
The modal factors typically used are:
- Single (1 payment): 1.00
- Annual (1 payment): 1.00
- Semi-Annual (2 payments): 0.50
- Quarterly (4 payments): 0.25
- Monthly (12 payments): 0.0833
Example
- If the Annual Premium is $1,200 and the client pays monthly, the Modal Factor is 0.0833.
Modal Premium=1200×0.0833=99.96
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- The monthly payment would be $99.96
- If the modal factor is not applied, the system will calculate the premium by dividing the total premium by the number of payments.
Payments per year calculation =1200/12=100- The monthly payment would be $100
Things to consider
- Modal factors may vary slightly depending on the insurance carrier.