Net premium valuation
A net premium valuation is an actuarial calculation used to place a value on the liabilities of a life insurer.
Background
It involves calculating a present value for the contractual liabilities of a contract, and deducting the value of future premiums. Both contractual liabilities, and future premiums in this calculation allow only for mortality and interest. The key with a net premium valuation is that the premiums being valued are theoretical measures; they make no reference to the actual premiums being charged by the insurer.
This technique is a well-established actuarial valuation method that became popular because of its simplicity, consistency, and ease of calculation.
See also
- Gross premiums written
- Life Assurance
- Term life insurance
- Permanent life insurance
- Whole life insurance
- Universal life insurance
- Variable universal life insurance
- Corporate-owned life insurance
- Servicemembers' Group Life Insurance
- Segregated funds
- Annuity
- Independent financial advisers
- Estate planning
- Retirement plan
- False insurance claims
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