MTHEL131 Lecture 5: Week 5
6 Feb 2018
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Document Summary
Base policy holder dies, cancels policy -> riders end. Do not impact or create any csv. Life insurance policy attributes: unilateral contract, 1 party of contract can get out of contract anytime (insured, insurer can never unless insured doesn"t pay premium, contracts of adhesion, insurer says this is the rate, no negotiating. Capital structure of life insurance stock company: owned by stockholders: benefit: ability to raise capital. Demutualization: process of going from mutual company to stock company. Each par p/h given choice: receive shares or $ Consider: coverage, premium paid, years of ownership, type of policy. This policy is entitled to participate in any surplus -> par policy reserves: $ set aside to pay future pay outs. Story of p&c company: economical insurance: 98% non-par, 2% par policy holder, 700-900k per policy holder, non-par said they weren"t told and it"s not fair, compromise: agreement that non-par will get some amount.
