MTHEL131 Chapter Notes - Chapter 5: Mutual Fund, Policy Exchange, Whole Life Insurance
17 Dec 2016
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Whole life insurance are priced as if everyone will die at an average terminal age, which is 100 in north america: usually at 100 the cash surrender value would equal the face value. Cash surrender value is created for prefunding of future mortality costs. Dividend illustrations provide an illustration of the insurer dividends that would be paid in the current financial situation: the way insurers allocate their amounts paid as dividend will have a huge influence on the illustration. Contribution principle the insurer should distribute surplus accumulated on behalf of a block of policies in the same proportion. Not suited for people who only needs life insurance for less than 15 years, because the csv and dividends are not favorable, and those who can"t afford the premium payments. Guaranteed that no payments are required after the set year or age: premiums are higher than ordinary life insurance for a term, but theoretically the two totals should be the same.
