Term Life Insurance Research Articles

The risk screening effect of digital insurance distribution

AbstractExtant research holds that digital sales channels advance competition and service or goods availability but rarely details the attendant information asymmetry. Leveraging a large unique dataset, this study examines a specific case in which consumers have a choice between offline and digital channels for insurance purchases. We find that digital channels screen in consumers with lower unobserved risk. For term life, endowment and disease insurance products, the average risks of the policies purchased through digital channels were significantly lower than those purchased offline after controlling for all observed risk characteristics. This risk screening effect mainly comes from the inclusion of new low‐risk enrollees. As a consequence, digital channels exhibit lower information asymmetry and greater profitability compared to offline channels.

Perhitungan Cadangan Premi Asuransi Jiwa Berjangka dengan Menggunakan Metode Zillmer dan Fackler

Human life is never free from risk. Along with the development of the era, humans began to realize the importance of protecting themselves in the event of a risk, including the risk of death. To overcome this, many individuals transfer the risk by registering themselves or their families with life insurance. The life insurance that is focused on is term life insurance, which is a form of protection with a certain period of time that has been set. In order to run its operations properly, insurance companies need to prepare premium reserves with accurate calculations. These calculations can be done through two actuarial methods, namely prospective and retrospective methods. This study uses the Zillmer method (prospective) and the Fackler method (retrospective) for calculating premium reserves. The purpose of this study was to determine the analysis of the results of calculating the premium reserve value from the two methods. The premium reserve values ​​calculated using the Zillmer and Fackler methods were different. At an interest rate of 6.25%, the Fackler method produces a higher premium reserve compared to the Zillmer method. This difference is because the Zillmer method includes other costs such as acquisition costs, administration, and agent commissions in calculating premium reserves. In contrast, the Fackler method does not take these costs into account in its calculations.

Neural calibration of hidden inhomogeneous Markov chains: information decompression in life insurance

Markov chains play a key role in a vast number of areas, including life insurance mathematics. Standard actuarial quantities as the premium value can be interpreted as compressed, lossy information about the underlying Markov process. We introduce a method to reconstruct the underlying Markov chain given collective information of a portfolio of contracts. Our neural architecture characterizes the process in a highly explainable way by explicitly providing one-step transition probabilities. Further, we provide an intrinsic, economic model validation to inspect the quality of the information decompression. Lastly, our methodology is successfully tested for a realistic data set of German term life insurance contracts.

Application of The Fackler and Full Preliminary Term Methods In Calculating n-Year Term Life Insurance Premium Reserves

Application of The Fackler and Full Preliminary Term Methods In Calculating n-Year Term Life Insurance Premium Reserves

Research on the Optimal Pricing for Life Insurance

Term life insurance is a policy that guarantees the buyer of the policy insurance benefit upon their death for a period of time in exchange for a premium paid by the insurance buyer to the seller yearly for a set number of years. Purchasing life insurance has become an important, if not necessary, financial investment in everyones life, as it protects their family from a potentially devastating financial loss if they unexpectedly pass away. This paper combined multiple variables in order to compute a pricing formula for life insurance. The final result is that as the age of purchase increases, the premium, or, in other words, the price of the life insurance using my pricing formula, increases exponentially, while the profit received decreases exponentially.

Calculation of Term Life Insurance Premium Reserves with Fackler Method and Canadian Method

Every individual around the world goes through the life cycle of birth and continues their journey with unique experiences. The uncertainty of the future, which includes both happiness and calamity, is a universal aspect of human life. Life risks, such as illness and death, are an unavoidable reality for every individual in this world. Life insurance is one of the solutions to manage these risks, with term life insurance being one of the options. The focus of this research lies on term life insurance, with the aim of calculating premium reserves using the Fackler and Canadian methods. This research is concerned with the process of calculating premium reserves, and the results show that the Fackler method produces a larger premium reserve value compared to the Canadian method. Recommendations are given to companies to use the Fackler Method in calculating term life insurance premium reserves to avoid potential losses that could occur if using the Canadian method. The choice of premium calculation method is a strategic key in effective risk management for the company.

A comparison benefit reserves of an n–year term life insurance between using the vasicek model and cox-ingersoll-ross model

A comparison benefit reserves of an n–year term life insurance between using the vasicek model and cox-ingersoll-ross model

Bequests and the Demand for Life Insurance

In this study, we investigate how the desire to leave a bequest influences both ownership of life insurance and changes in the demand for life insurance. We find that the desire to leave bequests is related to the ownership of both term and cash value life insurance. We also find that an increase in the self-reported probability of leaving a bequest is positively associated with the purchase of life insurance for small bequests and negatively associated with the likelihood of dropping term coverage. The results provide further empirical support for the use of life insurance to satisfy bequest motives and offer insight into the ways in which bequest motives may impact life insurance demand.

A Quantitative Comparison of Mortality Models with Jumps: Pre- and Post-COVID Insights on Insurance Pricing

Population events such as natural disasters, pandemics, extreme weather, and wars might cause jumps that have an immediate impact on mortality rates. The recent COVID-19 pandemic has demonstrated that these events should not be treated as nonrepetitive exogenous interventions. Therefore, mortality models incorporating jump effects are particularly important to capture the adverse mortality shocks. The mortality models with jumps, which we consider in this study, differ in terms of the duration of the jumps–transitory or permanent–the frequency of the jumps, and the size of the jumps. To illustrate the effect of the jumps, we also consider benchmark mortality models without jump effects, such as the Lee-Carter model, Renshaw and Haberman model and Cairns-Blake-Dowd model. We discuss the performance of all the models by analysing their ability to capture the mortality deterioration caused by COVID-19. We use data from different countries to simulate the mortality rates for the pandemic and post-pandemic years and examine their accuracy in forecasting the mortality jumps due to the pandemic. Moreover, we also examine the jump-free and jump models in terms of their impact on insurance pricing, specifically term annuity and life insurance present values calibrated for both pre- and post-COVID data.

Domestic values: gendered labor and the uncanniness of critique in marketing life insurance for women

ABSTRACT While term life insurance has historically been sold to income-earning men to secure the financial futures of their families, in India there is a growing number of life insurance products targeting women, particularly unwaged housewives. In marketing these financial products to Indian women, I show how life insurance companies incorporate the feminist critique of devalued domestic labor. Drawing on analysis of insurance policies, marketing and promotional materials, as well as personal advice articles, it goes on to show how there is, something uncanny or unsettling about the way life insurance not only commodifies and financializes domestic labor, but also focuses on the reproductive bodies of women through health riders. The article situates contemporary discourses of life insurance for women within a longer history of women’s property and of mobilizing capital through rather than for women in India.

A COVID-19 stress test for life insurance: insights into the effectiveness of different risk mitigation strategies

COVID-19 has affected mortality rates and financial markets worldwide. Against this background, we perform a COVID-19 stress test for life insurance, considering a joint financial and mortality shock, to evaluate the effectiveness of different risk mitigation strategies. Specifically, we conduct a model-based simulation analysis of a life insurer selling annuities and term life insurances. The analysis includes stress scenarios that are calibrated to observations during the first year of the COVID-19 pandemic. We also consider new business and study the risk situation under three different risk mitigation strategies observed in practice as an immediate response to the pandemic: stopping sales, increasing premiums, or adjusting investment strategies. Results show that a life insurer’s risk situation is mainly affected in the short term, selling annuities (in addition to term life insurance) immunizes against the mortality shock, and the immediate use of risk mitigation strategies can help reduce the negative impact.

Behavioral aspects of household portfolio choice: Effects of loss aversion on life insurance uptake and savings

This paper provides empirical evidence that loss aversion decreases insurance demand and increases savings demand using individual-level data on the US elderly. Specifically, loss-averse individuals have a significantly lower ownership rate of term life insurance which is pure insurance, and they have a higher ownership rate of whole life insurance, which has a savings element. This paper also shows that loss-averse individuals own a smaller amount of stock (equity) than others and a greater amount of non-risky financial assets, such as deposits and bonds. This aligns with the prospect theory's prediction that boundedly rational consumers may view pure protection insurance (term life insurance) as a “risky investment” like stocks because the insured may just lose the premiums if a bad event does not occur during the policy term. They instead opt for “safer options” such as whole life insurance, which guarantees payment of a death benefit, or deposits and bonds. Furthermore, this paper provides suggestive evidence that loss aversion has a negative impact on insurance demand beyond the US, by showing that there is a negative association between loss aversion and insurance penetration rates in 51 countries.

Penentuan Premi Tahunan Asuransi Jiwa Syariah Dwiguna Gabungan Berjangka n-Tahun

Sharia life insurance is an effort to help each other among customers by paying tabarru funds intended for customers who are at risk of unexpected financial losses caused by death. The purpose of this research is to determine the annual premium value of the combined -year endowment life insurance based on sharia principles with the interest rate changed to Return On Investment (ROI) which changes stochastically following the Langevin type model and obtains the ROI relationship, the term of the agreement, the amount of compensation for the annual premium of the sharia -year combined endowment term life insurance. The Monte-Carlo simulation method is applied to obtain annual premium values ​​with initial ROI values ​​equal to 0.35, 0.06 and 0.029. The results obtained in this study by applying a Monte-Carlo simulation to the calculation of the annual sharia -year joint endowment life insurance premium for joint participants are men aged 45 years, women aged 42 years, and men aged 18 years and older. A 10-year agreement with an initial ROI value of 0.35 is Rp. 6,161,275, an initial ROI value of 0.06 is Rp. 6,585,471, and an initial ROI value of 0.029 is Rp. 6,631,190. The results obtained show that the relationship between ROI, the term of the agreement and the amount of compensation for the annual endowment life insurance premium is that the smaller the initial ROI value, the greater the annual premium value.

Determination of Term Life Insurance Premiums with Varying Interest Rates Following The CIR Model and Varying Benefits Value

Term life insurance is an insurance that provides protection for a certain period that has been agreed upon in the policy. The policy is an agreement that contains the participant's obligation to pay premiums contributions to the insurance company and the insurance company's obligation to pay benefits in the event of a risk to the insurance participant as agreed in the policy. Interest rates will influence the calculation of premium value and benefits in the long term. So we need a model of interest rates that will change by time. One of the models that can be used is the CIR model. This research purposes to simulate the CIR model that will be carried out to determine interest rates for calculating term life insurance premiums for five years, with premiums paid at the beginning of the 1/m interval or monthly premium payments and benefits paid at the end of the 1/m interval when the participant dies. The case that will be discussed is when the benefit various. The results of this study are the CIR model can be applied to calculate the term life insurance premiums for five years and the premium calculation results show that the amount of the premium increase every year with varying benefits.

How does the insurer's mobile application sales strategy perform?

AbstractWhile the impact of an Internet‐based sales strategy on sales performance has been well studied, there is little academic research that examines the impact of a mobile application (MA) sales strategy on the sales performance of insurers. Using a unique data set for term life insurance policies from a Chinese life insurer, we study the impact of implementing this strategy on insurance purchases. We find a significant growth in the insurance purchase quantity and somewhat lower growth in premiums received from new policies. This paper determines that this is due to improved channel accessibility and the cost reduction of the MA channel. Although sales of traditional distribution channels are cannibalized in the short term by the MA distribution strategy, this substitution effect does not persist in the long run. In addition, we find that this strategy reduces impulsive purchases.

ESTIMASI CADANGAN KLAIM PRODUK ASURANSI JIWA KREDIT UNTUK PESERTA PENSIUN

Theoretically, insurance companies rarely suffer losses. Insurance companies in managing finances, are very careful, because they will face possible risks in the future in the form of claim payments. Therefore, in selling the products, they do not use the usual forms of marketing. They use agents and brokers in distributing risk products that are sold. In addition, for certain reasons, the company also cooperates with other parties. This cooperation is essentially a form of strategic alliance. Namely cooperation between the insurance company as the issuer of the policy with the bank as the owner of credit for customers. The problem is how insurance companies face the risk of claims in the future for bank customers who have retired status and are vulnerable to the risk of death. This article discusses term loans from customers at a bank as the insured who has retired status and they are guaranteed by an insurance company as the insurer. How much funds are provided by the insurer in the future to pay the risk of death (claims) of the insured? Using the semi-continuous prospective reserve method for term life insurance products, the results show that the insurer is experiencing liquidity difficulties in order to bear the burden of claims that have already occurred and are expected to suffer losses later. The reinsurance scheme offered has also not been able to cover the insurer's losses. Therefore, the most feasible scheme to assist the insurer's liquidity due to high claims is to enlarge new policies through the scheme of entry age for the insured with a younger age while continuing to run the reinsurance scheme.

10 important financial investments for orthopods in India

10 important financial investments for orthopods in India

Estimation of Prospective Benefit Reserve Based on Gross Premium Valuation Method using Indonesian Mortality Table IV and De-Moivre Assumptions

According to regulations, life insurance companies must meet several requirements related to the company's financial health, one of which is a technical reserve. Technical or premium reserves are funds that the insurance companies must prepare. These funds will cover financial losses experienced by someone who applies for the claim. Thus, the author will use the Gross Premium Valuation (GPV) method in this research. Premium reserves can be determined using two approaches: retrospective and prospective reserves. In this research, the author will determine the prospective reserves with GPV for single decrement insurance and single life n-year continuous term life. The distribution of deaths used in determining the probability of death is the Indonesian life table IV and the de-Moivre assumption with parameter (ɷ=111). Different assumptions for the death probability distribution will result in different premium reserve values, so we can see a difference in premium reserves resulting from the two death probability distributions. This research uses data from male policyholders aged 40 years who followed continuous term life insurance for 20 years. Benefits will be paid right at the time of death, with a discrete method of premium payments made at the beginning of each year for 10 years.

Annual Premium Determination for Joint Life Insurance with De Moivre and Gompertz’s Mortality Laws

This research discusses how to determine the annual premium for joint life status. The death rate (mortality rate) is one of the factors that can be considered when calculating the premium. The quantitative method used in this study was to estimate the parameters of the De Moivre and Gompertz’s Mortality laws using secondary data from the 2011 Indonesian Mortality Table (TMI III) for men and women. This calculation generates a formula for calculating the annual premium for joint life insurance based on De Moivre and Gompertz mortality law. Starting with estimating the parameters of Gompertz's mortality law for the Indonesian Mortality Table in 2011 using the maximum likelihood estimation method, then calculating the combined life probability, death benefit APV, continuous life annuity APV, and annual premium for joint life insurance. The value of the annual premium on joint life insurance with the mortality law of De Moivre and Gompertz for a simulated term life insurance n = 10 years with age x (husband) 28 years and y (wife) 25 years, the death benefit (R) is Rp. 50,000,000; and the interest rate is 3.50 percent with the Indonesian Mortality Table in 2011. According to the calculations, the annual premium value of joint life insurance based on Gompertz's mortality law is greater than De Moivre's mortality law.Keywords: Join Life Insurance, Mortality Laws, Annual Premium.

Penentuan Premi Asuransi Jiwa Berjangka Status Last Survivor Menggunakan Model GFGM-Type II Copula

The last survivor status of term life insurance is multiple life insurance whose benefits are paid by the insurance company to the heirs if all policyholders have died within a predetermined period of time. The risk of death of a married couple is usually assumed to be independent of each other. But in fact there is a relationship between the risk of death for the couple. The method that can be used to determine the premium for married couples with the assumption of independence is the GFGM-Type II Copula method. The purpose of this study is to determine the formulation of the last survivor term life insurance premium using the GFGM-Type II Copula method. The results obtained from this study are the formulation of the last survivor term life insurance premium using the GFGM-Type II Copula method. Based on the simulation results, it is concluded that the last survivor term life insurance premium calculated with the assumption of independence is smaller than using GFGM-Type II copula Copula.