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MTHEL 131 (32)
Chapter 5

Chapter 5.pdf

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Department
Mathematics Electives
Course
MTHEL 131
Professor
Dave Oakden
Semester
Spring

Description
Nature of Whole Life Insurance May 13 2014531 PMLot of different kinds of Whole Life Death benefit is paid upon policy holders death if policyholder does not lapse policy Face and premiums normally remain flat Whole Life as Endowment or Term InsuranceMost IC use terminal age in pricing commonly 100If policyholder survives to age 100 face is paid to policyholder like endowment insurance since CSVfaceIf policyholder doesnt live to 100 whole life is also identical to term to 100 ie death benefit at time of death prior to age 100Whole Life Cash ValuesActuarially whole life insurance must build up policy values since payment is certain at defined policy terminal age100Expect growing cash surrender values CSVsCSVs on whole life US mandated by law Not obligated in Canada can sell term to 100 with zero CSVs cheaper than whole lifePolicy normally has table of CSVs for policy Can terminate policy to get VSC but can borrow using CSVs as collateral policy loan at interestIf you die with policy loan L your death benefit is F L If you surrender a policy with loan L your net surrender value isPar and Nonpar Whole Life Par policyholders shares in IC profits and is paid dividendsNon par no profit participation no dividends but premiums usually lowerIC will usally show policy applicant dividend illustration based on recently experienced mortality expense interestDividend not guaranteed policyholder only participates in realized profits but IC try their best to pay dividends Chapter 5 Page 1
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