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
Act that established mandatory notification by manufacturers of products and the distributors of these products to the Consumer Product Safety Commission in the event they become aware of a ...
Important means of preventing accidents and injuries. Insurers take corporate safety programs into account when rating workers compensation and other business insurance policies. ...
Protecting against loss by setting aside one's own money. This can be done on a mathematical basis by establishing a separate fund into which funds are deposited on a periodic basis. ...
Coverage on real property written to have no time limit. A single deposit premium pays for insurance for the life of the risk. The insurer earns enough investment income on the deposit to ...
Method of accessing capital by the insurance industry in order to hedge against a future catastrophic occurrence. The mechanism works as follows: Primary insurance company AJAX pays a ...
Work-related accident. Occupational accidents that injure employees are the responsibility of the employer and are covered by workers compensation insurance. In recent years, the term ...
Amount received by the policyholder if the policy is canceled, benefits are reduced, or the premium is reduced. ...
Situation in which several liability insurance policies are in force to cover the same risk, thereby resulting in higher limits of coverage than is required to adequately insure the risk. ...
Tax charged to finance the old age, survivors, disability, and health insurance (OASDHI) plan. Both employer and employee share in the cost, making contributions on an equal basis. The ...
Have a question or comment?
We're here to help.