Yearly Price Of Protection Method
Actuarial procedure used to determine the cost of protection of a cash value life insurance policy on an annual basis. This cost of protection is developed by the following steps:
- Cash value at the beginning of the year plus the premiums paid in for that year are summed up, and the total is multiplied by an assumed interest rate factor of (1+i), resulting in the theoretical end of the year CASH SURRENDER VALUE;
- From the theoretical end of the year cash surrender value, the actual cash surrender value at the end of year and the dividends during that year are subtracted. The resultant figure is the sum allocated for MORTALITY CHARGES for that year;
- The sum allocated for mortality charges for that year is then divided by the AMOUNT OF RISK (face value end of the year cash surrender value) per $1000 of FACE AMOUNT.
Popular Insurance Terms
Element used to adjust losses to reflect the incurred but not reported claim (IBNR) under the retrospective method of rating. ...
Unsecured bond. The only protection for the lender is the credit and reputation of the borrower. The method of evaluating the quality of debentures is to analyze the earning power, overall ...
Unallocated funding instrument for pension plans under which premiums are placed on deposit, and are not currently allocated to the purchase of benefits for the employee. At retirement, an ...
Activities of interest in underwriting an application for life insurance to determine the rate classification (premium) for the applicant. For example, a sky diver is at greater personal ...
Term used for a general class of insurance such as life insurance, property insurance, or workers compensation insurance. ...
Use of new rate structures by an insurance company without first obtaining approval of a State Insurance Department. ...
Paid-in surplus, revaluation surplus, and donated surplus. This surplus includes all sources of surplus with the exception of earned surplus. ...
Provision for known claims due but not paid, known claims not yet due, and provision for incurred but not reported (IBNR) claims. The critical problem facing a casualty insurance company is ...
Law in some states that permits an insurance company to deny payment of a claim resulting from an insured loss because of breach of warranty or misrepresentation, provided that the breach ...
Have a question or comment?
We're here to help.