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
Transaction of reinsurance under which there is a limit on the total liability of the re-insurer and future investment income is a recognized component of the underwriting process. This ...
Term meaning that an exporter of goods that are damaged or destroyed during international shipment relinquishes responsibility for the damage or destruction once the goods leave the point ...
Abbreviation for premium payment. It usually applies to a limited number of annual premium payment policies such as a ten-day policy. ...
Method of accident prevention whose objective is to detect system-component deficiencies that have the potential for causing accidents. ...
Same as term CEDE: to transfer a risk from an insurance company to a reinsurance company. ...
Health characteristic considered by an insurer underwriting an applicant for life or health insurance. Many insurance companies charge reduced premiums for nonsmokers. ...
Coverage on an all risks basis, subject to exclusions of war, wear and tear, loss resulting from delay, loss of market, infidelity of the insured's employee, loss due to rain, sleet, snow, ...
Annuity that provides income payments for a number of years provided the annuitant is alive to receive them. All income payments cease upon the death of the annuitant. ...
Policyholder's equity share of the life insurance company's assets. The share is based on the policyholder's contribution to assets (the company's gross premiums minus cost of insurance, ...
Have a question or comment?
We're here to help.