On the provision for and assessment of life insurance expenses; and the appropriate computation of premium reserve; with representative quotations from previous writers - Softcover
Synopsis
This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1890 Excerpt: ...that regarding investment life insurance, all previous writers with Mr. Makeham's exception, have looked upon the provision for expenses as necessarily an arbitrary quantity unless the annual premium is made variable; or one bearing, for any given year or period, no uniform ratio in all cases to the sum of expense to be assessed. At best, they have been content to demonstrate that this arbitrariness may be sufficiently circumscribed in its limits, not to be a serious disadvantage, or may even prove an advantage under possible contingencies. But this is not science or true economy, and we cannot allow the case to rest so. It needs no argument to show that the mode of loading, granting the mode of assessing expenses just discussed, proposed by Mr. Makeham and myself, at once preserves a level premium and extinguishes all arbitrariness in the provision for expenses, but demands an appropriate computation of premium reserve. This may be called an actual or gross premium reserve. I make bold to suggest this title, although I know that the term " gross premium reserve" has been applied to a reserve so computed that it should rather be called a net or minimum reserve; being, except that it provides for a full normal death rate, the least reserve with which the perpetuation of a company is apparently possible; what is now known as a net premium reserve, being, except that it makes no specific account of expenses, rather a mean reserve, useful for the purpose of government valuations. The following table gives examples of premiums with their resulting provisions for expense cost and reserves, computed upon particular assumptions according to the principle which I am advocating. It is by no means necessary that all companies should adopt the same assumption...
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