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Approximate Valuation of Endowment Assurances

Published online by Cambridge University Press:  18 August 2016

W. Palin Elderton
W. Palin Elderton
Affiliation:
Equitable Life Assurance Society
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Extract

In the discussion that followed the reading of a paper before the Institute of Actuaries Students’ Society, by E. A. Woodall on the valuation of special policies, F. Bedford explained that certain classes, such as joint life endowment assurances, could be valued conveniently by assuming that all the policies will mature at the same age, and calculating the net premium on the same assumption. This method is mentioned in the Students’ Journal, vol. I, No. 2, pp. 24–26, where Mr. Woodall, in giving the method in the abstract of his paper and the discussion, explains how the method applies to certain classes, and writes : “Since the reserve for an endowment assurance maturing at “70 or 75 is practically the same as the reserve for an endowment “assurance of the same term maturing at 50, 55, 60, or 65, the “error of 10 years in the equivalent age is of little importance,” “provided the net premium is calculated on the same assumptions.” This quotation may be taken as the text for the present paper, which discusses the application of the method to ordinary endowment assurances and the errors involved in its use.

Type
Research Article
Information
Journal of the Institute of Actuaries , Volume 48 , Issue 1 , January 1914 , pp. 1 - 32
Copyright
Copyright © Institute and Faculty of Actuaries 1914

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References

page 2 note * Since the paper was read the author's attention has been drawn to the fact that in the form in which it is now submitted the method was first suggested by Mr. Thomson—for policies maturing at ages 50 to 65—in the discussion on Mr. Lidstone's “Some Remarks on the Valuation of Endowment Assurances in Groups.” See J.I.A., xxxiv, 91.

page 12 note * A table of the kind was given in “Frequency Curves and Correlation,” p. 107.

page 13 note * The rates of mortality giving the annuity-values of Table A are shown in the last column of that Table.

page 20 note * [In view of the fact that the reserves—unlike the premiums—for Double Endowment Assurances are materially affected by the age at entry, we have invited Mr. Elderton to refer to this suggestion in his supplementary observations. His remarks on the subject will be found on p. 32.—EDS.]

page 20 note † [The figures will be found in Mr. Elderton's communication on p. 31.—EDS.]