[L078]

lockbox plan

A plan or arrangement between either an insurer or agent and a bank to use the bank as the premium collection facility. Insureds send payments to a post office box or bank lockbox controlled by the bank. The bank processes the payment directly to the proper account, for a service fee. Using this method speeds up the entire collection process, freeing up the accounting staff of the agent or insurer, and making premium funds available more quickly to earn investment income.