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A Method of approximating to the Effect of a Reduction in the Rate of Interest used in calculating Reserves under Whole-Life Policies; with Tables

Published online by Cambridge University Press:  18 August 2016

John Stewart
Affiliation:
City of Glasgow Life Assurance Company

Extract

In view of the present movement on the part of life assurance companies towards a reduction in the rate of interest used in calculating their reserves, it is desirable to have some easily applied method of measuring approximately, with sufficient accuracy for the purpose of a preliminary estimate, or a rough check on fully computed valuation figures, the effect of such a change. The process is simple as regards whole-life policies, classified according to age attained, if the premiums valued represent some stated proportions of the gross premiums; but difficulty arises when the premiums used vary with the rate of interest, as in the case of a net-premium valuation. The following Tables I to VI (see pages 268-271) supply the means of approximating from the net-premium reserves for whole-life policies, under the HM or combined HM and HM(5) Tables, at most rates of interest presently used, to the corresponding reserves at rates one-half or one-quarter per-cent less.

Type
Research Article
Copyright
Copyright © Institute and Faculty of Actuaries 1896

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