The formula to calculate the Annualized Premium (AP) is:
\[ AP = \left( \frac{EP}{PP} \right) \times 12 \]
Where:
An annualized endorsement premium is a calculated value that represents the cost of an insurance endorsement on an annual basis. Endorsements are additional coverages or modifications to an existing insurance policy, and their premiums are often calculated for shorter periods. By annualizing the endorsement premium, insurers and policyholders can better understand the cost of the endorsement over a full year, which aids in budgeting and financial planning.
Let's assume the following values:
Using the formula:
\[ AP = \left( \frac{300}{6} \right) \times 12 = 50 \times 12 = 600 \]
The Annualized Premium (AP) is $600.