rate reduction

  • A term frequently used in group insurance by nonparticipating companies to describe what corresponds to the dividend paid by mutual companies. A rate reduction is a reduction in premium and it is frequently made retroactive either in the form of a cash refund or a credit available for application against future premiums. A retroactive rate reduction is, thus, very similar to a dividend.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).