Interview Preparation

[rakshasarafParticipant]

I understand why it will be highest for Endowment followed by Whole life. But didn’t understand why pure followed by term?

[shikhaagarwalParticipant]

Rakshasaraf wrote:

I understand why it will be highest for Endowment followed by Whole life. But didn’t understand why pure followed by term?

As far as I know, it is because at any age probability of survival is more than prob of death. And Hence, prob of claim payment in pure is more than term.

Sent from my SM-G611F using Actuarial Info mobile app

[Arpit SuranaParticipant]

ShikhaAgarwal wrote:

Highest to Lowest;

Endowment-whole-pure-term

Sent from my SM-G611F using Actuarial Info mobile app

True, I would like to add on the reason behind this, the reason is Present Value

In Endowment, the payment is sure and made within n or at n years making it highest Pv.

In whole, the payment is also sure, but the time is not, so PV is less than endowment . So making it less chapter than endowment but costlier than pure or term since payment is sure.

In pure, the payment is made on survival after n years and people generally survive after n years making it expensive than term but because some people die, so 100% payment is not made. Thus making it cheaper than endowment or whole.

In term, this is the cheapest of all and thus have most sales. Only some people die in a span of n years, making the PV less than anyone else.

P. S- One of my teacher told me that this question is often asked in interview

[sushantguptaParticipant]

arpit wrote:

ShikhaAgarwal wrote:

Highest to Lowest;

Endowment-whole-pure-term

Sent from my SM-G611F using Actuarial Info mobile app

True, I would like to add on the reason behind this, the reason is Present Value

In Endowment, the payment is sure and made within n or at n years making it highest Pv.

In whole, the payment is also sure, but the time is not, so PV is less than endowment . So making it less chapter than endowment but costlier than pure or term since payment is sure.

In pure, the payment is made on survival after n years and people generally survive after n years making it expensive than term but because some people die, so 100% payment is not made. Thus making it cheaper than endowment or whole.

In term, this is the cheapest of all and thus have most sales. Only some people die in a span of n years, making the PV less than anyone else.

P. S- One of my teacher told me that this question is often asked in interview

But tell me 1 thing guys…as u all are saying premium for pure endowment is greater than term assurance..

But what if a person who is 40 years old and he is taking a 30 year term assurance/30 year pure endowment.. In this case the chances of person being died in that 30 years is definitely high than his survival upto 30 years..so in this case I think that for sure the premium for term assurance will be higher than pure endowment. What u guys think?? If not den do let me know the reason.

Thank you

Sent from my Moto G (4) using Actuarial Info mobile app

[Arpit SuranaParticipant]

sushantgupta wrote:

arpit wrote:

ShikhaAgarwal wrote:

Highest to Lowest;

Endowment-whole-pure-term

Sent from my SM-G611F using Actuarial Info mobile app

True, I would like to add on the reason behind this, the reason is Present Value

In Endowment, the payment is sure and made within n or at n years making it highest Pv.

In whole, the payment is also sure, but the time is not, so PV is less than endowment . So making it less chapter than endowment but costlier than pure or term since payment is sure.

In pure, the payment is made on survival after n years and people generally survive after n years making it expensive than term but because some people die, so 100% payment is not made. Thus making it cheaper than endowment or whole.

In term, this is the cheapest of all and thus have most sales. Only some people die in a span of n years, making the PV less than anyone else.

P. S- One of my teacher told me that this question is often asked in interview

But tell me 1 thing guys…as u all are saying premium for pure endowment is greater than term assurance..

But what if a person who is 40 years old and he is taking a 30 year term assurance/30 year pure endowment.. In this case the chances of person being died in that 30 years is definitely high than his survival upto 30 years..so in this case I think that for sure the premium for term assurance will be higher than pure endowment. What u guys think?? If not den do let me know the reason.

Thank you

Sent from my Moto G (4) using Actuarial Info mobile app

There is no policy that exist in the market that provide term insurance at age of 50 for 30 years or similar to that.

There is only some policies which provide term insurance for 10 years to age 50.

[Author]

Posts