The effects of irregular interest rates on net level terminal reserves for a 20-year endowment policy

Date

3-1989

Degree

Bachelor of Science in Agriculture

College

College of Arts and Sciences (CAS)

Adviser/Committee Chair

Rhodora O. dela Peña

Abstract

The reserves of the company is the most sensitive part of an insurance business. Incorrect assumption of interest and mortality affects the financial stability of the company.

This special problem tackled the effects of irregular interest rates applied in the computation of reserves. Commutation columns at different interest rates using the 1958 CSO Mortality Table were obtained. Net annual premiums and net level terminal reserves were computed using the three assumptions: 6% fixed rate, varying savings and market interest rates.

Results of the study showed that varying interest rates contradicts some theories of reserves and affects the profitability and solvency of the company. Irregular interest rates underestimate/overestimate the value of reserves.

Language

English

Location

UPLB Main Library Special Collections Section (USCS)

Call Number

Thesis

Document Type

Thesis

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