The adjusted premium is important for life insurance companies to calculate, as it is the premium used to figure the minimum cash surrender value (CSV)

The adjusted premium is important for life insurance companies to calculate, as it is the premium used to figure the minimum cash surrender value (CSV). All life insurance policies are required to calculate a CSV due to the No forfeiture Provision, which means that the life insurance policy always has a value, even when the policy holder chooses not to use it for its original purpose (payout upon death).The CSV is the value that could be received by terminating the policy and choosing to "cash-out.”.Required:

Explain the different types of Premium Adjustments.

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Expert Solution

1) net premium = net premium is the expected present value of policy benifit less the expected present value of future premium. The net premium calculation does not take into account future expenses associated with maintaining the policy.

2) Earned premium = earned premium is a pro-rated amount of paid in advance premium that has been earned and now belongs to insurer. The amount of the earned premium equates to the sum of total premium collected by an insurance company over a period of time.

3) net premium writtens = net premium written is the s of premiums writtens by an insurance company over the course of a period of time less premium ceded to reinsurance company plus any reinsurance assumed.net premium writtens of represent how much of the premium the company gets to keep for assuming risk.

4) developed to net premium earned = the ratio of developed premium to net premium earn over a given period developed the net premium earned indicate whether a insurance company is chargeing high enough premium to cover benift guarantee by the policy it writtens.

ekkarill92 answered 1 year ago

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