Life Insurance: Pricing
摘要
The aim of this chapter is to explain the calculation of insurance premium in life insurance. The premium is determined by two factors: financial factor and demographic factor. The financial factor depends on the expected value of the economic disbursement foreseen when an event occurs. This event is based on the duration of human life, due to death or survival of one insured. Additionally, it takes into account the interest generated between when it is paid and when any performance is met. The demographic factor is based on mortality tables, which contain the rate of mortality and likelihood of survival. The combination of these two factors defines the first level of premium. A safety loading is then added to this premium. Then further explicit loadings are charged. They have the purpose of covering management expenses and acquisition costs of the contracts. In the paragraphs that follow, the classification of life insurance on the basis of performance is explained. The actuarial formulas for Capital performance insurance products (term life and deferred capital) are explained. In the end, the actuarial formulas for annuity insurance products are detailed.