Life Insurance Cost
Amount paid to an insurer. Determination of the actual cost (not the price paid) of a life insurance policy has been widely discussed for many years in life insurance and consumer circles. The traditional or net cost method (that adds a policy's premiums, and subtracts dividends, if any, and cash value) does not consider the time value of money. The LINTON yield method, a theoretical approach, attempted to remedy this by comparing a cash value policy with a combination of decreasing term insurance and the yield of a side fund of bonds and other investments. Other methods have been proposed. At present many states require prospective insureds to be given interest-adjusted cost figures that do take into consideration the time value of money. This method is not altogether practical for INTEREST SENSITIVE POLICIES, but it is generally felt that present work toward a new approach will eventually result in a useful means of comparing the costs of these policies.
Popular Insurance Terms
Size of the losses used as a factor in calculating premium rates. For example, the U.S. Bureau of Labor Statistics studies the number of days lost by injured employees per million ...
Coverage that is renewable at the option of the insured, who is not required to take a medical examination. Regardless of physical condition, the insured must be allowed to renew the policy ...
Branch of knowledge dealing with the mathematics of insurance, including probabilities. It is used in ensuring that risks are carefully evaluated, that adequate premiums are charged for ...
Mathematical premise stating that the greater the number of exposures, (1) the more accurate the prediction; (2) the less the deviation of the actual losses from the expected losses (X - x ...
Quality of investments of insurance companies. State insurance regulators establish rules for company investments. Authorized investments vary, depending on whether a company is a life ...
Contractual obligation that requires one party to the contract to fulfill its obligation before another party to the contract is required to fulfill its contractual obligation. For example, ...
Contracts of reinsurance in which expected income from investments is a major component of the UNDERWRITING process. Also, the ultimate liability of the reinsurer is limited. The reinsurer ...
Person by whose life the duration of an insurance policy, estate trust, or gift is measured. This person is generally referred as the insured in an insurance policy. ...
Premium paid by an insured business to an insurance company from which the company subtracts charges for the cost of putting a policy on its books, premium taxes, and profit. The remainder ...
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