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An Actuarial Analysis of Participating Life Insurance

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  • P. Linnemann

Abstract

An actuarial model is developed to reveal the intrinsic nature of participating life insurance. The basic safe-side criterion is examined. It is established how the first-order prospective net premium reserve includes safety margins or bonus loadings, and it is demonstrated how the bonus loadings are currently released. It is demonstrated how surplus may be distributed and accumulated as a terminal bonus in an equitable way. The level premium is divided into a variable recurrent single premium and a variable natural premium, and an alternative to the prospective net premium reserve is examined. A capitalization of future safety margins or bonus loadings, which are related to past premiums and the paid-up benefit, may allow the insurance company a considerable increase in investment freedom. The theory is illustrated by numerical results.

Suggested Citation

  • P. Linnemann, 2003. "An Actuarial Analysis of Participating Life Insurance," Scandinavian Actuarial Journal, Taylor & Francis Journals, vol. 2003(2), pages 153-176.
    • Handle: RePEc:taf:sactxx:v:2003:y:2003:i:2:p:153-176
    DOI: 10.1080/03461230110106336
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    Cited by:

    1. Oytun Hac{c}ar{i}z & Torsten Kleinow & Angus S. Macdonald, 2023. "On Technical Bases and Surplus in Life Insurance," Papers 2310.16927, arXiv.org.

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