Abstract
The life insurance industries usually use the Life Table for the valuation process, especially in calculating premiums and policy values of a policy. However, the Life Table is rarely updated; and it may even take years before they are updated. This happens because the insurers believe that the information in the Life Table is still related to the current state of a country and for the next several years. In fact, data and information related to mortality rates in a country are constantly changing and always being updated annually. Therefore, as an approach, researchers use the projection of mortality to approach the mortality rate in the future. Thus, future mortality data can be predicted so that better policies can be made by the governments or insurance industries. In this study, the Abridged Life Table of Indonesia is used in the projection of mortality for both sexes (male and female) of the population in Indonesia. The results of mortality projection are then used to calculate the Expected Present Value (EPV) of a term annuity-due under uniform distribution of deaths (UDD) for several values of and ages. The results obtained show that there is a decrease in the value of the mortality rate in the next few years. Therefore, it can be assumed that there is a possibility for longevity risk to occur in the future.
Highlights
The data used in TMIV is the population of people who have been insured (AAJI, 2019)
If the government wants to take the best policy by using the mortality rate of the Indonesian population in the future, demographic data would be a better data used to find out information about the current condition of the Indonesian population
Especially the mortality rates in Indonesia, the government or insurance company could predict and minimize the possible losses caused by the longevity risk. (Janssen, 2018)
Summary
The Abridged Life Table obtained was used to analyze the distribution of life expectancy and the determination of the value of the term annuity using the assumption of a uniform distribution of death (UDD) for several age cases in both groups of women and men in Indonesia. This will help in measuring the value of the annual term EPV using data on Indonesia's Abridged Life Table.
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