What is automatic premium loan in SAP FS-PM - Policy Management?

SAP Term: automatic premium loan

• Component: FS-PM

• Component Name: Policy Management

• Description: An option for an insurance contract whereby any unpaid insurance premiums are automatically transferred to a policy loan as long as the maximum loan amount is not yet reached.

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• Key Concepts: 
  Automatic premium loan is a feature of the SAP FS-PM Policy Management component. It allows for the automatic loan of premiums from a policyholder's account to cover the cost of a policy. This feature helps to ensure that policyholders are able to pay their premiums on time and in full. 
  
  How to use it: 
  To use the automatic premium loan feature, the policyholder must first set up an account with the insurance company. The policyholder must then provide the insurance company with information about their financial situation, such as income and assets. Once this information is provided, the insurance company will be able to determine if the policyholder is eligible for an automatic premium loan. If they are eligible, the insurance company will automatically deduct the premium from the policyholder's account each month. 
  
  Tips & Tricks: 
  It is important to remember that an automatic premium loan is not a substitute for regular payments. The policyholder should still make regular payments on their policy in order to avoid any late fees or other penalties. Additionally, it is important to keep track of how much money has been loaned out and when it needs to be paid back. 
  
  Related Information: 
  The SAP FS-PM Policy Management component also includes features such as automatic payment processing, policy renewal, and claims processing. Additionally, there are other features available in SAP FS-PM that can help policyholders manage their policies more effectively, such as automated notifications and reporting tools.