Macro For Expected Present Value of Life Assurance Contracts
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The model contains a macro for calculation of the Expected Present Value of following types of Life Assurance Contacts
1. Whole Life Assurance : Under this type of Assurance contract, the insurance company pays a lump sum amount to the policyholder on his/her death.
2. Term Life Assurance: Under this type of Assurance Contract, the insurance company pays a lump sum amount to the policy holder, if and only if he/she dies within a term as specified under the contract.
3. Pure Endowment Assurance: Under this type of Assurance Contract, the policy holder gets a lump sum amount at the end of the specified term if he/she remains alive at the end of that specified term as stated under the contract.
For Example, if the term of the contract is say 10 years, then the policy holder will get a lump sum amount at the end of 10 years if he/she is alive at that time.
4. Endowment Assurance: This is a type of life insurance contract under which the policyholder gets a lump sum amount on specified term or on earlier death.
It can be looked upon as a combination of Term Assurance & Pure Endowment Assurance.
The Assumptions that we have used are as follows:
a> Al lives follow AM92 mortality table.
b> The Payment is done by the insurance company at the end of the year in which the claim arises.
The pre-requisites for understanding this model are knowledge of VBA & CM 1 (Actuarial Science).