Professional Documents
Culture Documents
Insurer
Policyholder
Frequency ofatPremium
Premium to be paid periodic interval.
Every year
Insurance Claim
2. Investment Earnings
3. Expenses
Mortality Factor
Mortality Factor is the rate at which people may die
This Table
MORTALITY TABLE Is constructed
MALE FEMALE Based on past
AGE LIVING DYING LIVING DYING data
A part of the
premium is invested
by the insurer to
earn some interest When the investment earnings
are expected to be more,
lower premiums are charged
Net or Pure Premium
The premium worked out after taking into
account the interest is called the Net or Pure
premium
Office Premium
Net Premium + Expense Factor
Different Types of
Premium
Risk premium: the amount required to purchase one
year of coverage.
lower age
Age Calculation
30 Days 12 months
03 2002
05
02 2001
04
(30+04=34 months) (12+2=14 months)
10 09 1980
-
Days Months
years
2001-
34-10 14-09
1980
=24 =05
=21
21 years 0 2 4 6 8 10 12
22 years
Rs 50,000 - - Rs 2
Premium Calculation
Step 1 : Determine tabular premium depending on the Table-Term (Consider
Age)
Step 2 : Allow for modal rebate
Step 3 : Allow for adjustment for Large Sum Assured
Step 4 : Multiply be number of Units
Step 5 : Add if any
•Accident extra
•Health extra
•Occupational extra
•Other extras
Step 6 : Get Annual Premium
Step 7 : Divide by 2-Semiannual, 4-Quarterly, 12 - Annual
Premium Calculation
Tabular Premium Calculate rider premium
36.55 (1/1000)*25000=25
Mode Quarterly
Solution ????
Solution
Tabular Premium: Rs 28.40
Rebate for large SA: Rs 1.50
Adj for mode: nil
TP after all adj: Rs 26.90
Premium
Life Fund
Some amount is
Kept as reserve
Distributed
To Participating
POLICY
RESERVE Policy Holders
Bonus
Distribution of the valuation surplus to
policyholders is done through the declaration
of Bonus
Reversionary Terminal
Reversionary Bonus
Can be simple or compound