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Published online by Cambridge University Press: 18 August 2016
This subject was ably dealt with in 1894 by Mr. G. F. Hardy (J.I.A., xxxi, 261), who submitted suitable methods and formulas for the calculation of premiums, and dealt with other practical points, such as the treatment of these policies at a valuation. The article and the discussion constitute a most valuable contribution to the science of life assurance: accordingly in the following essay it is proposed to avoid the repetition of questions which were then fully discussed, and rather devote attention to the application of the system.
page 14 note * These calculations were made from the last Board of Trade Returns deposited during the year 1898. More recent accounts of the Offices in the group show an average rate of interest of £3. 12s. 10d. per-cent, and profit from investments of 2s. 9d. per-cent, making £3. 15s. 7d. per-cent in all. It may further be remarked that one office with larger funds than any of the others earned over £3. 18s. per-cent, and this had considerable effect in maintaining the average.
page 29 note * It must be remembered that in this investigation the premiums are supposed to be paid on the exact day they fall due, without the usual month of grace, and, further, that they are invested immediately to yield the full rate of interest. As these conditions do not hold in practice, a careful actuary would preserve a larger margin than ½ per-cent between the rate realized and the valuation rate.