Rate Of Return Method Of Cost Comparison
Approach advocated by the Federal Trade Commission (FTC) in its 1979 life insurance cost disclosure report. It calculates the rate of return earned by the savings element of a life insurance policy in these steps:
- determine pure cost of protection (mortality expectation).
- determine amount of dividends paid (if it is a. participating policy).
- subtract the pure cost of protection plus dividends from the GROSS PREMIUMS paid into the policy. This is the savings element.
- the rate of return equals the interest rate at which the savings element must be accumulated in order to equal the cash value of thepolicy at some future specified time period.
Popular Insurance Terms
Date of the initial annuity payment. ...
Transfer of property from a bailor to a bailee; for example, transferring a suit to be cleaned from the bailor (owner) to the bailee (cleaners). ...
Structure. In general, company functions are delegated to several departments: actuarial, agency, claims and loss control, investments, legal, marketing, and underwriting. ...
Circumstance under which the insured maintains that, if an insurance policy covers at least two scheduled items of real or personal property, in the event of a loss applicable coverage ...
Legal capability of those involved in mutual assent of making a contract, including an insurance contract. Those who have been deemed to be incompetent to make a valid contract include ...
Specific powers granted by the principal (the insurance company) to the agent in the contract. ...
Endorsement to an automobile insurance policy that protects an insured in either or both of two circumstances when driving a non owned car: business endorsement if the insured's negligent ...
Written document containing instructions on managing one's assets during one's lifetime. The document may be revoked (unless made irrevocable at creation), terminated, or amended at any ...
Premium income divided by the surplus account. ...
Have a question or comment?
We're here to help.