Abstract

In the course of an actuary's practice, the question not uncommonly arises—What is the value of a life interest, accompanied by a policy of assurance on the same life ? The most obvious course for solving this question is to value the life interest and the policy separately—the former by the well-known formula . With regard to the policy, it is not so clear how it should be valued. If valued on the same principles as the life interest, the value of a policy for £1 would be 1 − (p + d) (1 + A); but this formula is quite inapplicable, for it gives a negative value for many years to a policy, and almost always a much smaller value than the surrender value allowed by the Office. There is, therefore, apparently no choice but to take the value of the policy at the latter amount.

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