Abstract
The accurate calculation of the net single premium at rate of interestifor an assurance to cover the amount outstanding under a Building Society Mortgage subject to a higher rate of interestjis a fairly lengthy process. However, as a fairly heavy contingency loading is usually added, the following simple method gives results sufficiently accurate for most practical purposes.For a loan of initial amount unity repayable overnyears by level annual instalments in arrear the single premium calculated at rate of interestjon a life agexis given by the expressionThe sum assured is payable at the end of the year of death and is equal to the amount of the loan then outstanding before payment of the instalment then due.
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