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A common approach taken by insurance companies is to take 100% of regular premiums, being the annual premiums received for a policy, and 10% of single premiums. This assumes that an average life insurance policy lasts 10 years and therefore taking 10% of single premiums annualises the single lump sum
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There can be single payment premiums which is actually the sales spread over a period of long time. (In contrast to the recurring premiums which involves payment of premiums every year). So APE is a measure to normalize the single premium payments to the recurring payment premium equivalent. This
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revenue by normalising policy premiums into the equivalent of regular annual payments. This is particularly used when the sales contain both single
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to allow comparisons of the amount of new business gained in a period by life insurance companies.
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133:and regular premium business. This is used by the
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