• Robert G. Ward opened the discussion by describing the basis of fractional premiums introduced by the Provident Mutual late in 1957, at which time a system of quantity discount was announced under which the premium for yearly premium life insurance policies was $2 less per $1,000 on the portion of a policy in excess of $4,000 insurance.
  • The factors which increase the cost of fractional premiums over yearly premiums are (1) loss of interest on premiums paid other than yearly, (2) loss of uncollected fractional premiums in the year of death and (3) the cost of additional premium collections.
  • The first two factors are related to the amount of the premium while the third is a "per policy" expense independent of the premium or amount of insurance.

1960 - SOA - Discussion of Subjects of Special Interest: Fractional Premiums, Society of Actuaries - 3p