Reply To: Interview experience for a LI pricing

[divastharejaParticipant]

As per my understanding about the subject. Following must the answers to the respective questions asked above:

1. If the mortality rate’s are high, it will increase the expected cost of insurance for the company & hence will increase the premiums to be charged.This will impact Endowment assurance, Term assurance, whole life assurance products. If mortality rate’s are low then pure endownment & Annuity products(Pension) will have a higher premium being charged.

In case of Unit linked,most of the risk is being borne by the policyholder hence he will only have to pay Mortality charge* (SAR》0) which will increase due to high mortality rate’s & has to pay a higher premium.

2. As such there is no direct relationship between expenses & mortality.However if at the time of pricing company forecast a higher mortality, it will charge a higher initial expense so as to recoup the cost as soon as possible.

3.An interest rate has an inverse relationship with the present value of the benefits. Acc to different life Assurance products an increase in interest rate will reduce the expected cost of benefit payable.

4.I performed a trend Analysis studying the graph of Endownment assurance & Term assurance, as per my observation

A graph for Endownment assurance shows an increasing trend upto a certain duration and then few years before maturity becomes parallel to X-axis.

A graph for Term assurance is Normally Distributed.

Hope it helps😊

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