Life Insurance

Question1: Term and Endowment policy NSP (Net Single Premium)

Calculation Methods.
Age No of No of Pv@1 Policy Total PV
insured dead 3% value of death
person Person claim
31 20800 800 .971 10000 ?
32 20000 1000 .943 10000 ?
33 19000 1500 .915 10000 ?

Answer:
Age No of No of Pv factor Policy Total PV
insured dead @1 3% value of death
person person claim
31 20800 800 .971 10000 7768000
32 20000 1000 .943 10000 9430000
33 19000 1500 .915 10000 13725000
Total 30923000

NSP for Term policy= Total PV of death claim/ Number of insured person at the
beginning
= 30923000/20800

= 1486.68

NSP for Endowment Policy= PV of total claim (Death+ Living)/ No of insured person at beginning

Living person at the end of 3rd year= (19000-1500)

=17500
Living claim at the end of the 3rd year= 17500*.915*10000

=160125000

Total Claim = 30923000+160125000/20800

= 9185

Question2: Do NSP for Term and Endowment both.

Year Age No of No of Pv Policy Total PV
insured dead factor@ value of death
person Person 1 @3% claim
1 31 9480 25 .971 5000 ?
2 32 9455 26 .943 5000 ?
3 33 9429 28 .914 5000 ?

Answer:

Year Age No of No of dead Pv factor@ Policy value Total PV of

insured person 1 @3% death claim
Person
1 31 9480 25 .971 5000 121375
2 32 9455 26 .943 5000 122590
3 33 9429 28 .914 5000 127960
Total 371925

NSP for Term policy = Total PV of death claim/ No of insured person at the beginning

= 371925/9480

=39.23

NSP for Endowment Policy = PV of total claim (Death + Living) / No of insured

person at the beginning
Living person at the end of 3rd year= (insured person – Death person)
= 9429-28
=9401
Living Claim at the end of 3rd year = 9401*.914*5000
 = 42962570
NSP for endowment policy = 371925+42962570/9480
= 4571.15

Question3:
Nap = Net Annual Premium Calculation for term policy

Formula

Net Annual Premium = PV of death claim / total premium receipt @tk 1

year age No of insured No of dead Pv at tk 1 @

person person 3%
1 31 20800 800 .971
2 32 20000 1000 .943
3 33 19000 1500 .915

Policy value =10000

Now calculate NAP for both term and endowment policy

Answer:
Term

year age No of No of dead Pv at tk 1 Policy Total pv of

insured person @ 3% value death
person claim
1 31 20800 800 .971 10000 7768000
2 32 20000 1000 .943 10000 9430000
3 33 19000 1500 .915 10000 1372500
=
30923000

In NAP for term

year age No of Premium Pv at tk 1 @ Total

insured receipt @ 3% premium
person 1tk per receipt @ tk
annum 1
1 31 20800 20800 1 20800
2 32 20000 20000 .971 19420
 3 33 19000 19000 .943 17917
= 58137

NAP = pv of death claim / total pv of premium receipt @tk 1

NAP = 3092300/58137

= 531.898

NAP for endowment

End living person at the end of year 3 rd year = (19000- 1500) = 17500

Living claim at the end of 3rd year = 17500*.915*10000 = 160125000

NAP for endowment formula

Pv of total claim (death + living) / total pv of premium receipt @ tk 1

=30923000+16012500 / 58137

= 3286.16

Question4: Find out NSP and NAP by Term and Endowment policy .

Age No of insured No of death PV of 1@3% Policy value

person person
31 61350 1350 .971 10000
32 60000 2000 .943 10000
33 58000 2970 .915 10000
34 55030 2450 .888 10000
35 51580 4200 .863 100000

ANSWER:

Age No of insured No of death PV of 1@3% Policy value Total PV of

person person death claim
31 61350 1350 .971 10000 13108500
32 60000 2000 .943 10000 18860000
33 58000 2970 .915 10000 27175500
34 55030 2450 .888 10000 21756000
35 51580 4200 .863 100000 36246000
 =117146000

TERM policy,
117146000
NSP= --------------------------------- = 1909.47
61350

Endowment policy,
Living person of the end of 5th year =(51580-4200)
=47380
Living claim at the end of 5th year =(47380*.863*10000)
= 408889400

117146000+408889400
Total =------------------------------------------ = 8574.33
61350

NAP

Age No of issued premium PV of 1@3% PV of premium

person receipt@ tk1
receipt@1

31 61350 61350 1 61350

32 60000 600000 .971 58260
33 58000 580000 .943 54694
34 55030 55030 .915 50352.45
35 51580 51580 .888 45803.04
=270459.49

TERM POLICY
117146000
NAP =--------------------------------------------------- =433.14
270459.49

ENDOWMENT POLICY

117146000+408889400
NAP=------------------------------------------------------------- = 1944.97
270459.49