A Guide To Life Insurance - Premium Rates More ....


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The effect of these factors emerges only over a long period, and is restricted to two types of policy: those that guarantee the payment of the sum assured at a specific date or on earlier death (endowment policies) and those that guarantee the payment of the sum assured on death whenever this occurs (whole-life policies).

Shorter-term protection policies (term assurances), where the sum assured is payable only on death within a specified period with no return to the policyholder on survival, allow the actuary to calculate with greater precision the necessary sums to be accumulated, and therefore the premium rates.

The impact of changes in mortality and interest rates is therefore of less significance. In pure protection policies, life insurance works very much as house insurance does, the company calculating the risks and working out the required premium with no allowance for any return to the policyholder if he happens to survive.

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Though companies use similar mortality tables and assume broadly similar rates of interest, premium rates do vary considerably.
These differences arise as a result of several factors.
One is the actual mortality experience of the companies themselves; a company that has suffered lower claims will have acquired larger reserves and be able to quote lower rates.
Another is the type of policyholders a company already has: if too many of these fall into one age group it may wish to........ see: click here for Management Of Funds


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