What is an Insurance Premium?
An insurance premium (tiếng Việt: phí bảo hiểm) is the payment made by the insured (individual or business) to the insurance company in exchange for risk coverage under an insurance policy.
Key Premium Determinants
- Risk probability: Industry, credit rating, claims history, geographic location
- Sum insured: Higher insured value = higher premium
- Policy term: Annual policies standard; multi-year contracts often discounted
- Deductible level: Higher deductible reduces premium (shared risk principle)
- Claims history: Experience rating adjusts premium upward for frequent claimants
Payment Methods
| Method | Frequency | Notes |
|---|---|---|
| Single payment | Annual | 3–5% discount typically available |
| Instalment | Quarterly/semi-annual | Common for corporate policies |
| Monthly | Monthly | Convenience surcharge ~5–10% |
Tax Deductibility in Vietnam
Insurance premiums for property, liability, and credit insurance directly related to business operations are deductible as legitimate business expenses under Vietnam corporate income tax (CIT) regulations.
Relevance to Business Lending
Lenders in Vietnam typically require borrowers to insure collateral assets (property, equipment). The insurance premium is an additional cost item in the total cost of borrowing.