Classical Life Insurance

• Technical interest rate: is the valuation interest rate (see Sect. 6.1) used in life insurance when pricing cash flows in calculations of premiums, premium reserves, and the like; its level may be regulated by the state (state insurance supervision); the low (or high) value of the technical interest rate increases (or decreases) the insurance price, respectively; typically, a conservative choice of this interest rate is typical in practice

• Profit sharing: is an allocation of a given part of insurer’s technical gain to policyholders. the technical gain consists of (1) investment gain due to a positive difference between the actually earned interest rate and the technical interest rate used for insurance calculations, (2) mortality gain due to an appropriate difference in assumed and actual mortalities, and (3) expense gain due to an appropriate difference in assumed and actual expenses; the values assumed a priori in calculations are usually called statutory values

• Life insurance options: mean that in various phases of life insurance contracts clients have a possibility of choice among several alternatives without additional charges (e.g. an option to convert a sum insured into a life annuity)

• Multiple life insurance: are insurance products, in which insurance benefits depend on life status (mostly “alive” or “dead”) of several lives (married couples, whole families, boards of directors, and the like)

• Group insurance: relates to a group of insured persons that exists because of another reason than the given insurance (mainly a life insurance for employees of an employer)

• Comprehensive policy (insurance package): is a multiple risk cover by a single insurance policy; various riders of basic policies are popular in practice (e.g. a classical life insurance policy with a rider for accident insurance or for dread diseases)


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