Life insurance
insurance that pays out claim either on the
death of the insured person or after a set
period
Classification of Life insurance
1. Life insurance based on duration
2. Life insurance based on premium payment 3. Life insurance based on method of payment
of claim
4. Life insurance based on profit distribution 5. Life insurance based on number of lives
covered
Life insurance based on number of lives covered
1. Single 2. Multiple
a. Joint(First death)
b. Last survivorship (Last death)
Life insurance based on profit distribution
1. Without profit sharing
2. With profit sharing (max 95%)
Life insurance based on method of payment of claim
1. Single
2. level
Life insurance based on premium payment
1. NSP
2. NAP
Life insurance based on duration
1. Whole life
a. Single payment b. Limited payment c. convertible
2. Term life
a. Straight term b. Renewable c. convertible
3. Endowment
a. Pure
b. Ordinary
annuity contract
• An annuity contract is a method of converting wealth into a stream of income
• 2 party:
– Annuitant
– Financial institution
Types of Annuity contract
1. Annuity due
2. Ordinary Annuity
3. Deferred Annuity
Life insurance VS annuity
Subject Life insurance Annuity
1. Fund generation Claim is generated from
collected Premium Regular interest is
generated from deposited fund
2.Who interest is preferred Mainly nominee Annuitant
3. Death factor Claim starts after death Regular interest stops after death
4. Protection against Living too short Living too long 5. Fund calculation Premium is calculated
based on mortality of insured
Regular interest is calculated based on longevity of Annuitant
Term Endowment
Total death claim+ Total living claim Total death claim+ Total living claim
Age No. of insured person
No. of dead person
PV of Tk 1@3%
31 32 33 34 35
61350 60000 58000 55030 51580
1350 2000 2970 2450 4200
.971 .943 .915 .888 .863
1. Calculate Net Single Premium (NSP) for 5 years Term policy from following information:
Policy value Tk. 5000
Age No. of insured person
No. of dead person
PV of Tk 1@3%
36 37 38 39 40
9480 9455 9429 9401 9371
25 26 28 30 31
.971 .943 .915 .888 .863
2. Calculate Net Single Premium (NSP) for 5 years Endowment policy from following information:
Policy value Tk. 5000
Age No. of insured person
No. of dead person
PV of Tk 1@5%
31 32 33 34 35
9480 9355 9229 9101 8971
125 126 128 130 136
.952 .907 .864 .823 .784
3. Calculate Net Single Premium (NSP) & Net Annual Premium (NAP) for 5 years Term policy from following information:
Policy value Tk. 10000
Year Age No. of insured
person
No. of dead person
PV of Tk 1@5%
1 31 9480 125 0.952
2 32 9355 126 0.907
3 33 9229 128 0.864
4 34 9101 130 0.823
5 35 8971 136 0.784
Total PV of Death claim 5574880
NSP= = =
Total PV of death claim No. of insured at the beginning of the year
Policy value 10000 10000 10000 10000 10000
PV of death claim
Total PV of Premium receipt 42003
NAP= = =
Total PV of Death claim Total PV of Premium receipt
PV of
Tk 1@5% PV of
Premium receipt
@ Tk 1 0.952
0.907 0.864 0.823 Year Age No. of
insured person
1 31 9480
2 32 9355
3 33 9229
4 34 9101
5 35 8971
Premium receipt
@ Tk 1 per annum
Age No. of insured person
No. of dead person
PV of Tk 1@2%
35 36 37 38 39
30550 26354 23069 20507 18529
4196 3285 2562 1978 1164
.980 .961 .942 .924 .906
4. Calculate Net Single Premium (NSP) & Net Annual Premium (NAP) for 5 years Endowment policy from following information:
Policy value Tk. 5000
Year Age No. of insured
person
No. of dead person
PV of Tk 1@2%
1 35 30550 4196 0.98
2 36 26354 3285 0.961
3 37 23069 2562 0.942
4 38 20507 1978 0.924
5 39 18529 1164 0.906
Total PV of Death claim 62823125
NSP= Total claim= = No. of insured at the beginning of the year
Policy value
5000 5000 5000 5000 5000
PV of death claim
Total PV of Living claim
=living insured at the end*PVIF*policy value
= 78663450
Total claim 141486575
Total PV of Premium receipt 114985
NAP= = =
Total claim
Total PV of Premium receipt
PV of
Tk 1@2% PV of
Premium receipt
@ Tk 1
0.98 0.961 0.942 0.924 Year Age No. of
insured person
1 35 30550
2 36 26354
3 37 23069
4 38 20507
5 39 18529
Premium receipt
@ Tk 1 per annum
Age No. of insured person
No. of dead person
PV of Tk 1@3%
36 37 38 39 40
20800 20000 19000 17500 15800
800 1000 1500 1700 2000
.971 .943 .915 .888 .863
5. Calculate Net Single Premium (NSP) & Net Annual Premium (NAP) for 5 years Term policy from following information:
Policy value Tk. 10000
