• All these methods are based one way or another on the ancient truth that the present value of benefits, expenses, and margins must equal the present value of premiums.
  • When one considers the interest assumption, it must be remembered that rates are presently very high but may be showing signs of leveling off.
  • It seems inconceivable in view of the past that interest rates will stay at their present levels for a long period of time.
• If the interest assumption in the early policy years is taken as the rate on new investments, the actuary should allow for the possibility of a reduction after the first few policy years and provide for a more conservative rate at the later policy durations.
• [Bonk: Grading-?]

--  Samuel P. Adams

1968 - SOA - Premiums and Dividends for Individual Ordinary Insurance, Society of Actuaries - 30p

⇒ 1. What philosophy and techniques govern the determination of modern participating and nonparticipating premium rates and dividend scales?