What does Compensating Balance Plan mean? Read on to discover the definition & meaning of the term Compensating Balance Plan - to help you better understand the language used in insurance policies.
Compensating Balance Plan
An insurance cash flow plan whereby the insurer, in an account specifically set up for the plan, collects premiums and deposits them in the insured's bank. Although the account is in the insurer's name, the insured's bank recognizes the funds as the insured's compensating balance, freeing the insured's funds.
We hope the you have a better understanding of the meaning of Compensating Balance Plan.