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10.1.2. The Single Premium of Pure Endowment, Pure Endowment With Premium Refund and
Endowment Insurance _______________________________________________________________ 3
10.1.3. Single Premium Annuity ______________________________________________________ 3
10.1.3.1. The Premium of Immediate Lifetime Annuity __________________________________ 3
10.1.3.2. The Premium of Deferred Lifetime Annuity ___________________________________ 3
10.1.3.3. The Premium of the Temporary Annuity ______________________________________ 3
10.1.3.4. Certain annuities ________________________________________________________ 3
10.1.3.5. Annuity with Guarantee Period _____________________________________________ 3
10.1.3.6. The Premium of Joint Life Annuities_________________________________________ 3
10.1.3.7. The Premium of Annuities in p Payments Yearly _______________________________ 3
10.1.3.8. Some Special Annuities ___________________________________________________ 3
10.1.3.9. An Annuity Type of Technical Significance ___________________________________ 3
10.1.4. Joint Life Single Premium Insurance ____________________________________________ 3
10.1.5. The Premium Formula of the Generalised Traditional Life Insurance ___________________ 3
10.2. The Premium of Regular Premium Payment Insurance __________________________________ 3
10.2.1. The Regular Premium of the Term, Pure Endowment and Endowment Insurance __________ 3
10.2.2. The Premium of the Term Fix Insurance__________________________________________ 3
10.2.3. The Premium of Regular Premium Annuities ______________________________________ 3
10.2.4. The Premium of Joint Life Regular Premium Insurances _____________________________ 3
10.3. Calculation of Gross Premiums ____________________________________________________ 3
10.3.1. The Gross Premium of Single Premium Insurances _________________________________ 3
10.3.2. The Gross Premium of Regular Premium Insurances ________________________________ 3
10.3.3. The Difference Between Premiums Calculated for Annual and Monthly Premium Payment __ 3
11. The Premium Reserve ______________________________________________________ 3
Kew Words ________________________________________________________________________ 3
11.1. The Premium Reserve of the Term Insurance__________________________________________ 3
11.2. Premium Reserve of Pure Endowment and Endowment Insurance _________________________ 3
11.3. Zillmerization and Other Problems__________________________________________________ 3
11.4. Non-forfeiture Options and Policy Loan _____________________________________________ 3
11.4.1. The Types of Non-forfeiture Options ____________________________________________ 3
11.4.2. Limiting Non-forfeiture Options ________________________________________________ 3
12. Calculation of the Premium Reserve __________________________________________ 3
12.1. The Calculation of the Premium Reserve Generally_____________________________________ 3
12.2. The Calculation of the Annual Prospective Premium Reserve _____________________________ 3
12.3. The Changing of the Premium Reserve Recursive, Retrospective Premium Reserve Formulae __ 3
12.3.1. The Change of the Premium Reserve of Single Premium Insurances____________________ 3
12.3.2. The Retrospective Formula of the Premium Reserve of Regular Premium Insurances Without
Zillmerization______________________________________________________________________ 3
12.4. The Calculation of Mid-year Premium Reserve ________________________________________ 3
12.5. A negative Premium Reserve ______________________________________________________ 3
12.6. Cash Flows in Unit Linked Insurance________________________________________________ 3
13. Zillmerization as a Method of Gross Premium Reserve Calculation ________________ 3
13.1. Zillmerization in the Conservative View ____________________________________________ 3
13.2. Zillmerization Today ____________________________________________________________ 3
13.3. The Interpretation of Zillmerization _________________________________________________ 3
13.4. Appendix: Relations Concerning Zillmerization, their Proof and Other Addendums____________ 3
13.4.1. Zillmerization in the Conservative Approach ______________________________________ 3
13.4.1.1. The Division of the Premium Based on the Equivalence Equation __________________ 3
13.4.1.2. The Minimum Condition Regarding z ________________________________________ 3
13.4.1.3. The Relation of PZ, Px+1:n-1 , P1, p, z and the Premium Reserve at the First Anniversary 3
13.4.2. The Discounted Expected Value of Necessary Premiums_____________________________ 3
13.4.3. Determining the Last Year ____________________________________________________ 3
13.4.4. Correction if the Annual Premium is Paid in Instalments, But Arrives with Certainty _______ 3
13.4.5. Correction if the Annual Premium is Paid in Instalments Depending on Mortality ________ 3

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14. Possible Methods of Handling Inflation ________________________________________ 3

Key Words_________________________________________________________________________ 3
14.1. Premium Increase _______________________________________________________________ 3
14.2. Investment Profit Sharing _________________________________________________________ 3
14.3. The Technique of Revalorization ___________________________________________________ 3
15. The Calculation of Inflation Premium Increase and Investment Profit Sharing_______ 3
15.1. Premium Increase Independent of Profit Sharing _______________________________________ 3
15.2. Profit Sharing Independent of Premium Increase _______________________________________ 3
15.3. Integrated Premium Increase and Investment Profit Sharing System the Technique of
Revalorization _______________________________________________________________________ 3
16. Modern Premium and Reserve Calculation_____________________________________ 3
Key Words_________________________________________________________________________ 3
16.1. The Profit Test _________________________________________________________________ 3
16.2. Case Study: Calculation of the Expense Part of a Rider to Life Insurance Policies _____________ 3
16.2.1. Should we use a level or an age-dependent premium? _______________________________ 3
16.2.2. The Problem _______________________________________________________________ 3
16.2.3. Spreading of expenses________________________________________________________ 3
16.2.4. The Effect of Reinsurance on the Premium________________________________________ 3
17. Some Problems of THe Life Insurance Industry_________________________________ 3
Key Words_________________________________________________________________________ 3
17.1. Some Problems of Founding a Life Insurance Company _________________________________ 3
17.2. Some Problems Arising in the Course of Company Operation_____________________________ 3
17.2.1. Product Development, New Policies_____________________________________________ 3
17.2.2. Computer Technological Background____________________________________________ 3
17.2.3. The Safety of the Insurance Company____________________________________________ 3
17.3. The Sale of Life Insurance, Sales Channels ___________________________________________ 3
17.4. Sales Through the Insurers Own Agent Network ______________________________________ 3
17.4.1. Network Organisation and Management __________________________________________ 3
17.4.2. Commission System, Commission Regulation _____________________________________ 3
17.4.3. Recruiting _________________________________________________________________ 3
17.5. Technical Duties Regarding the Signing and the Administration of a Life Insurance Policy ______ 3
17.5.1. The Insurance Application ____________________________________________________ 3
17.5.2. Policy Administration ________________________________________________________ 3
17.5.3. Underwriting _______________________________________________________________ 3
17.5.4. Policy Issue ________________________________________________________________ 3
17.5.5. Indexation, Indexation Letter __________________________________________________ 3
17.5.6. Claims Handling Making Use of Non-forfeiture Options, Insured Event, Maturity, Benefit
Payment __________________________________________________________________________ 3
17.6. The Profit of the Life Insurance Company ____________________________________________ 3
18. Technical Income Statement _________________________________________________ 3
Key Words_________________________________________________________________________ 3
18.1. The Technical Income Statement in General __________________________________________ 3
18.2. The Path of the Money Collected During the Year _____________________________________ 3
18.3. The Path of Money Already at the Insurer at the Beginning of the Year _____________________ 3
18.4. Calculating the Factors of Profit____________________________________________________ 3
18.4.1. Expense Profit, Income Correction ______________________________________________ 3
18.4.2. Mortality (risk) profit ________________________________________________________ 3
18.4.3. Surrender Profit_____________________________________________________________ 3
18.4.4. Investment Profit ____________________________________________________________ 3
18.5. Calculating the Mortality Profit ____________________________________________________ 3
18.5.1. Mortality Profit of Insurances With Single Premium ________________________________ 3
18.5.2. Mortality Profit of Insurances With Regular Premium Payment________________________ 3
18.5.3. Deviation from the Standard Mortality Table ______________________________________ 3
18.5.4. A Detour: What is the Benefit of the Term Fix Insurance? ____________________________ 3

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18.6. Embedded Value _______________________________________________________________ 3

19. The Actors and Rivals of the Life Insurance Market and its Significance in the National
Economy______________________________________________________________________ 3
Key Words_________________________________________________________________________ 3
19.1. The Actors of the Life Insurance Market _____________________________________________ 3
19.2. The Connection Between Life Insurance and the Social Security System and Benefits _________ 3
19.3. The Effect of Life Insurance on the National Economy __________________________________ 3
Mortality rates and their Estimation _____________________________________________ 3
Key Words_________________________________________________________________________ 3
Probability Theory Approach __________________________________________________________ 3
Mortality Intensity ___________________________________________________________________ 3
Estimation of Mortality Rates __________________________________________________________ 3
Equalisation of Raw Mortality Rates _____________________________________________________ 3
References to the Chapter _____________________________________________________________ 3
Explanation of Terms__________________________________________________________ 3
Notation and the most important relations used in the book __________________________ 3
The Hungarian male and female Population mortality tables and commutation numbers of
year 1998, with 3.5% technical interest rate ________________________________________ 3
Male populatin mortality table__________________________________________________________ 3
Female population mortality table _______________________________________________________ 3
Disability adjusted life expectancy in WHO member countries _______________________ 3
References ___________________________________________________________________ 3
Books_____________________________________________________________________________ 3
Articles ___________________________________________________________________________ 3
Other material ______________________________________________________________________ 3
Home pages ________________________________________________________________________ 3

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LIST OF FIGURES AND TABLES

Figure 1.1.: Population size in the current area of Hungary_______________________________________ 3
Figure 1.2.: 1998 Hungarian age structure____________________________________________________ 3
Figure 1.3.: Traditional pyramid-shaped age structure __________________________________________ 3
Figure 1.4.: The predicted population of Botswana in 2020 with AIDS and without ____________________ 3
Figure 1.5.: Hungarian males probabilities of death up to age 45 in 1998 ___________________________ 3
Figure 1.6.: 1998 and 1949 probabilities of death of Hungarian males up to age 70____________________ 3
Table 1.1.: Life expectancy at birth for some countries in 1999 ____________________________________ 3
Figure 1.7.: 1949 generational and 1998 Hungarian mens mortality rates___________________________ 3
Figure 1.8.: 1949 generational and 1998 normal mortality rates from age 4________________________ 3
Figure 1.9.: 1949 Hungarian mens generational lx-s ___________________________________________ 3
Table 1.2.: U.S. annuity qx-s compared to the population mortality tables (1990-1996) _________________ 3
Figure 1.8.: Hungarian (1949 and 1998) and Swedish (1993) male life tables_________________________ 3
Figure 1.9.: Infant mortality per 1000 infants born as a function of mother's education Argentina, 1998.__ 3
Table 2.1.: Life expectancy in various western countries (1750-1987) _______________________________ 3
Figure 2.1.: The relationship between GDP per capita and the amount of life insurance per person in the
OECD countries (with the exception of Luxembourg) in 1995 _______________________________________ 3
Figure 2.2.: Variations of the life cycle _______________________________________________________ 3
Figure 2.3.: The relationship between income and consumption ___________________________________ 3
Figure 2.4.: The cash flow of the life cycle ____________________________________________________ 3
Table 2.2.: The structure of outgoing cash flow_________________________________________________ 3
Figure 2.5.: The structure of expenditures as a function of age ____________________________________ 3
Table 2.3.: The structure of incoming cash flow ________________________________________________ 3
Figure 2.6.: The structure of cash flow during the life cycle _______________________________________ 3
Table 2.4.: Major forms of saving ___________________________________________________________ 3
Table 2.5.: The interests related to the life of the individual and their methods of realization _____________ 3
3.1. Table: A summary of social position, safety interest, safety solutions, the care-taker, and the institutions 3
Figure 4.1.: The premium and benefit structure of the first Unit Linked Insurances_____________________ 3
Figure 4.2.: The benefits of the first Unit Linked Insurances_______________________________________ 3
Figure 4.3.: Premium and benefit structure of modern Unit Linked insurance _________________________ 3
Figure 4.4.: The value of unit funds in a Unit Linked Insurance ____________________________________ 3
Table 4.1.: Table of accidental injuries _______________________________________________________ 3
Figure 8.1.: The pattern of regular premium term insurance ______________________________________ 3
Figure 9.1.: The relative premiums of a single premium endowment insurance by different technical interest
rates, compared to the 0% interest rate ________________________________________________________ 3
Figure 9.2.: The relative premiums of a regular premium endowment insurance at different technical interest
rates, compared to the 0% interest rate ________________________________________________________ 3
Table 10.1.: Benefits received during the term by different types of annuities _________________________ 3
Figure11.1.: The relation of the annual premium needed and the actual premium in case of term insurance _ 3
Table 11.1.: The premium reserve of a term insurance before premium payment _____________________ 3
Figure 11.2.: The premium reserve of a term insurance __________________________________________ 3
Figure 11.3.: The premium reserve of term insurance with the same entering age and different insurance terms
_______________________________________________________________________________________ 3
Figure 11.4.: The premium reserve of term insurance with the same insurance term and different entering ages
_______________________________________________________________________________________ 3
Figure 11.5.: Term insurance with shortened premium term_______________________________________ 3
Figure 11.6.: The premium reserve of a regular premium term, pure endowment and endowment insurance _ 3
Figure 11.7.: Premium reserve of single premium pure endowment and endowment insurance ___________ 3
Figure 11.8.: Pure endowment insurance with shortened premium term _____________________________ 3
Figure 11.9.: The premium reserve of a regular premium endowment insurance with and without zillmerization
_______________________________________________________________________________________ 3
Table 12.1.: Example of negative premium reserve ______________________________________________ 3
Figure 12.1.: The premium reserve of the Credit Life insurance with different premium terms __________ 3
Figure 13.1.: Zillmerization in the conservative approach ________________________________________ 3

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Figure 13.2.: Zillmerization today ___________________________________________________________ 3

Table 13.1.: The values of premium reserves at anniversaries _____________________________________ 3
Figure 16.1: Cash flow with and without zillmerization __________________________________________ 3
Figure 16.2: The Actuarial Control Cycle _____________________________________________________ 3
Figure 16.3: Basin _____________________________________________________________________ 3
Figure 16.4. Random fluctuation__________________________________________________________ 3
Figure 16.5: Slight trend ________________________________________________________________ 3
Figure 16.6.: Drastic trend ______________________________________________________________ 3
Figure 18.1.: The path of the premium within the insurance company _______________________________ 3
Table F.1. ______________________________________________________________________________ 3

JZSEF BANYR: LIFE INSURANCE