The APE Full Form in Insurance is Annual Premium Equivalent. APE is a crucial instrument for an insurance company because it permits a honest comparison of their sales in relation the single-premium policies, and additionally with regular policies.
Annual Premium Equivalent Summary:
The annual premium equivalent (APE) is among the primary indicators of the performance of an insurance company that is applicable to regular and single premium policies. It aids the insurer in normalizing the amount of premiums paid and evaluate them against other policies to get an exact figure.
Understanding APE Calculation:
In essence what is happening is that the calculation of APE will reduce the premium for single and the regular premiums to a similar level by converting them to an annualized format. For single premium policy the lump sum premium is divided across the duration of the policy, which is deemed to be 10 years. The annualization of regular premium policies requires a simple addition of the amount of premium by the frequency of payments made within the particular period of billing.
Significance of APE in Sales Comparison:
APE is an ideal choice in the event that it is necessary to evaluate policies that have different types of premiums since it converts individual premiums in to equivalent annually. This process is then viewed as a method which to assess the effectiveness of sales and its products.
Utilization in Business Assessment:
APE is a crucial factor in determining the effectiveness of strategies for sales and channels for distribution. APE aids the insurance companies in monitoring the growth of their business as well as market trends and the performance of their various products.
