Interview Question for CT5 – 4
- This topic is empty.
-
Posts
-
Rishabh Surana
Q. How the life insurance products are priced? Ans: The price of life insurance contracts are the premiums. Premiums are calculated using the principle of equivalence i.e. by equating the expected present value of incomes to the expected present value of outgoes, on the basis of some suitable set of assumptions like-
•Mortality experience
•Investment returns
•Future expenses
•Bonus rates
Mayank Goyal
How many years of Mortality experience data do you think should exist? Mayank wrote:How many years of Mortality experience data do you think should exist?
Many insurance companies lack past experience in India , therefore while charging premium they tend to use IALM table , LIC table ,etc. and also conduct underwriting of the policy holder so that appropriate loading is being applied if he is prone to more risk .
According to me if past experience is considered , then it should not be more than 20 years . Since , there have been immense change in the standard of living of people , occupation , diseases , etc.
Cool. Thanks. What were the current investment rate you were using at your place?
I just want to have an idea. Are these govt bond rates?
Mayank wrote:Cool. Thanks.
What were the current investment rate you were using at your place?
I just want to have an idea. Are these govt bond rates?
Yes , govt bond rates .They majorily invest into govt bond as they bear limited risk unlike reinsurance firm .
And Future Expenses and bonus rates? how do they are extracted. A lot curious here…. Mayank wrote:And Future Expenses and bonus rates? how do they are extracted. A lot curious here….
Future expenses are estimated on the basis of the cost which is going to be incurred and also on the basis of similar products .
Bonuses are not certain most of the time , therefore while pricing they are calculated @8 % & 4% int p.a.
- You must be logged in to reply to this topic.