Open AccessA Comparative Study on Different Types of Premiums in Life Insurance Policies
Author(s) -
Kutub Uddin,
Md. Kaosar Uddin,
Farhad Kadir,
Rabindra Nath Mondal
Publication year - 2020
Publication title -
european journal of business and management research
Language(s) - English
Resource type - Journals
ISSN - 2507-1076
DOI - 10.24018/ejbmr.2020.5.6.588
Subject(s) - actuarial science , endowment policy , life insurance , payment , insurance policy , business , endowment , profit (economics) , auto insurance risk selection , finance , general insurance , economics , microeconomics , philosophy , epistemology , political science , law , china
An insurance system is a mechanism for reducing the adverse financial impact of random events that prevents the fulfillment of reasonable expectations, i.e. Insurance is designed to protect against serious financial reversals that may result from random events intruding on the plans of individuals. The Life Insurance Company calculates the policy price with the intent to recover claims to be paid and administrative costs and to make a profit. The cost of insurance is determined using the Mortality Table calculated by Actuaries. The insurance companies receive premiums from the policy owner and invest them to create a pool of money from which to pay claims and finance the insurance company’s operations. Rates charged for life insurance increase with the insured’s age because statistically people are more likely to die as they get older. In this paper, we have discussed different types of insurance policies including expenses and its impacts on lives. We also discussed the annual premium rates of endowment plans, three-payment plans and six-payment plans. Matlab programming is used to calculate the premium rates.