MTHEL131 Chapter Notes - Chapter 28: Whole Life Insurance, Term Life Insurance, Life Insurance
11 Oct 2013
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* the nsp is based on three assumptions: Premiums are paid at the beginning of the policy year. Death claims are paid at the end of the policy year. The death rate is uniform throughout the year. The computation of net premium rates for life insurance requires information as to: age and sex, benefits to be provided, mortality rates to be used, rate of interest assumed. There is a difference in the table of mortality rates when calculating for term insurance (probability of death at current age) vs. whole life insurance (probability of death in the future) Covers a set period, promises to pay the sum insured if the insured dies within the period. * for a five-year term policy, the cost of each year"s mortality must be computed separately for each of the five years and then added together. Covers the whole of life, promising to pay the face amount whenever the death occurs.
