Life Insurance - C6-C7
Call Kai
Learn
Practice Test
Spaced Repetition
Match
Flashcards
Knowt Play1/45
There's no tags or description
Looks like no tags are added yet.
Name | Mastery | Learn | Test | Matching | Spaced | Call with Kai |
|---|
No analytics yet
Send a link to your students to track their progress
46 Terms
Premium Calculation
Gross & Net Premium
Premium Calculation
Payment Rules
Premium Calculation
Pricing Methods
Chapter 6: Premium Calculation
Assumptions
The loss at issue random variable
The loss at issue random variable
Example
Premium Principle
Once the insurer calculates all the different possible ways they could lose or make money on a policy (the "loss distribution"), they need a formalized rule to decide exactly how much to charge the customer = Premium Principle
The Equivalence Principle Premium
The Equivalence Principle Premium
Net Premiums
The Equivalence Principle Premium
Net Premiums
The Standard Premium Formula
The Equivalence Principle Premium
Net Premiums
Why Monthly Premiums Cost More
The Equivalence Principle Premium
Gross Premiums
The Equivalence Principle Premium
Gross Premiums
These company expenses are three categories:
The Equivalence Principle Premium
Gross Premiums
The Actuary's Math Shortcut
The Equivalence Principle Premium
Gross Premiums
New Business Strain
If the Equivalence Principle sets the expected profit exactly to zero, how do insurance companies actually make money?
The Portfolio Effect
Calculating the "Tipping Point" of Profitability
Calculating the "Tipping Point" of Profitability
Life Insurance
Calculating the "Tipping Point" of Profitability
Annuities
Calculating the "Tipping Point" of Profitability
Hybrid Policies: Endowment Insurance
The Portfolio Percentile Premium Principle
This section answers a massive real-world flaw in the Equivalence Principle and introduces how insurers use statistics to virtually guarantee they won't go bankrupt.
The Flaw of the Equivalence Principle
The Solution: The Percentile Principle
The Percentile Principle
Math Shortcut
Most common Z-scores
The Percentile Principle
Example
Risk Diversification
How can actuaries deal with people who don't fit the "perfectly healthy" mold?
In the insurance world, this is known as handling substandard lives or extra risks.
Two main scenarios:
- The Underwriting Penalty (Life Insurance)
- The Structured Settlement Challenge (Annuities)
The Underwriting Penalty (Life Insurance)
The Structured Settlement Challenge (Annuities)
To model this "extra risk" in EPV calculations, one of three methods are usually used:
Extra Risk Modelling
Age Rating
Extra Risk Modelling
Constant Addition
Extra Risk Modelling
Percentage Multiplier
The equivalence principle is the traditional approach to premium calculation.
Policy value is a fundamental tool for insurance companies to assess the …
Mathematically speaking, the most important change is that we are moving away from assessing the cash flow at issue in the previous three chapters and changing our point of view to other times on the timeline.
The Future Loss Random Variable
The Future Loss Random Variable
Note
Policy Values
Instead of just saying "Liabilities - Income," the book frames it as
Valuation of Company
Gross and Net Premium Policy Value
Mortality Shift
Gross Future Loss r.v.
Calculating actual Policy Value
