Consistent Extra Premiums and Equivalent Decreasing Debts for Endowment Assurances.

Abstract

This article attempts to develop a practical system for dealing with extra-risks whilst retaining consistency in the terms offered to proposers. The extra premiums derived vary according to the view taken of the incidence of the extra-risk, and tables are produced to enable the underwriter to deduce quickly the required special terms.W. Perks' paper, ‘The Treatment of Sub-Standard Lives in Practice’ (J.I.A.78, 205), describes a system whereby the special terms are fixed according to uniform percentage increases in mortality throughout the term. This approach does not make a broad assessment of the incidence of the extra-risk. The present writer feels that some allowance for incidence should be made, and the process that follows attempts to adhere to the narrow theoretical path. The scope of this article does not include the interesting fields of underwriting practice and experience which were admirably discussed in W. Perks' paper.