What is annualized premium?
Annualized premium is the premium a policy would generate over twelve months, regardless of how it is actually paid. A $100 monthly policy is $1,200 annualized. It is the standard basis for commission, production credit and bonus qualification, which is why it appears everywhere.
Annualizing exists so that policies paid monthly, quarterly and annually can be compared and credited on one scale. Without it, a monthly policy would look twelve times smaller than the same coverage paid annually.
The thing to watch is that annualized premium is a projection, not money received. A policy annualized at $1,200 that lapses in month two collected $200. Production leaderboards built on annualized premium reward writing; only persistency tells you whether it stayed.
| Monthly premium | $100 → $1,200 annualized |
|---|---|
| Quarterly premium | $300 → $1,200 annualized |
| Annual premium | $1,200 → $1,200 annualized |
| Actually collected if it lapses month 2 | $200 |
Annualized premium is a projection, not receipts.