LIFE INSURANCE CONTRACTS
,Life insurance contracts
• A life insurance contract is an agreement made between a life
insurance company (or life office) and a policyholder.
• The policyholder agrees to make a series of payments to the life
office, known as premiums.
• In return, the life office agrees to pay an amount or series of amou
to the policyholder, known as the benefit/sum assured, on the
occurrence of a specified event.
,Life insurance contracts cont…
• The two main types of benefit payable under a simple life insuranc
contract are:
• a benefit is payable on the death of the policyholder: these are known as
assurance contracts
• a benefit is payable provided that the policyholder survives for a given ter
these are known as annuity contracts
• An actuary is involved in finding a fair price for such contracts. The
considerations involved are:
• the time value of money (TVM)
• the uncertainty attached to payments made in future, contingent on the d
or survival of a given life
, ASSURANCE CONTRACTS
,Life insurance contracts
• A life insurance contract is an agreement made between a life
insurance company (or life office) and a policyholder.
• The policyholder agrees to make a series of payments to the life
office, known as premiums.
• In return, the life office agrees to pay an amount or series of amou
to the policyholder, known as the benefit/sum assured, on the
occurrence of a specified event.
,Life insurance contracts cont…
• The two main types of benefit payable under a simple life insuranc
contract are:
• a benefit is payable on the death of the policyholder: these are known as
assurance contracts
• a benefit is payable provided that the policyholder survives for a given ter
these are known as annuity contracts
• An actuary is involved in finding a fair price for such contracts. The
considerations involved are:
• the time value of money (TVM)
• the uncertainty attached to payments made in future, contingent on the d
or survival of a given life
, ASSURANCE CONTRACTS
