How premium for MTA is calculated?

[Vivek]

Guys, I have a query - how premium for MTA is calculated for any policy? If possible, pls explain in layman language?

Thanks in advance!

Vivek

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[CONFUSED]

Normally it is calculated by system. But you can calculate by below method. It may very company to company.
Transaction Premium = [New Annual Premium X (Remaining Period/365)]-[(Old Annual Premium X ( Remaining Period / 365)]
MTA Due Premium = Old Due Premium + Transaction Premium

[PolicyWala]

Nicely explained by Confused. But the MTA premium is charged either by short period rate or prorate premium, depending upon the policy of the insurance company and type of the policy and other factors etc.

[Vivek]

If possible, could you pls explain with the help of an example.

Thanks again,
Vivek

[CONFUSED]

Example -
Policy Start Date 01/07/2010 to 30/06/2011
Mid term change dated 1/4/2010
Divided the total policy period in two parts -
- 01/07/2010 t0 31/12/2010
- 01/01/2011 t0 30/06/2011 (effective part due to MTA)

Annual Premium = 7500
Transaction Premium = [7500 * (91/365)] - [5000 * (91/365)]
= 1869.86 - 1246.58
= 623.28
Due Premium = 3719.17 + 623.28 = 4342.46

[Vivek]

Thanks Confused.