The Impact Of Clustering Methods For Pricing A Large Portfolio Of Vvs Case Study

The idea of “risk” is used in many fields and industries. There has been large efforts made towards the understanding of risk. Since, risk varies so much depending on the field of study, the need for learning about it is warranted. As can be imagined, the importance of risk in a market economy is crucial. In the 1990s, JP Morgan made the Value at Risk (VaR) a central component of its work efforts (Cecilia-Nicoleta, Anne-Marie, & Carmen-Maria, 2011).

Annuities are insurance products that can provide steady retirement income.You can invest in an fixedor variable annuity that begins immediately or starts payments at a

GAASB is proposing some major improvements to the reporting of pension plans. (GASB Proposes Major Improvements for Pension Reporting, 2011). Immediate recognition of more components of pension expense will be required, including the effect on the pension liability of changes in benefit terms, rather than deferred and amortization over as many as 30 years. Use of a discount rate will be required that applies the expected long term rate of return on pension plan investments where pension assets are expected to be available to make projected benefit payments and the interest rate on a tax exempt 30 year AA or higher rated municipal bond index to projected benefit payments where plan assets are not expected to be available for long term investment in a qualified trust. A single actuarial cost allocation method, the entry age normal, will be required. Governments participating in cost sharing multiple employer plans will be required to record a liability equal to their proportionate share of any net pension liability for the cost sharing plan as a whole. Governments in all types of covered pension plans will be required to present more extensive note disclosures and required supplementary information.

An insured dividend paying account that may be opened with a minimum amount and may be added to or withdrawn from as the member so chooses.

It is like someone giving you 100,000$ and you get to keep and invest it for couple of years and then you return only 95,000$ (when an insurance operation is profitable).

Members may have the future opportunity to receive returns of investment income and surplus premiums. Average is 30% per year.

A DB pension plan promises to pay you a certain amount of retirement income for life. The amount of your pension is based on a formula that usually takes into account your earnings

The insurance industry has long been applying game theory to evaluate whether or not individuals are insurable and determine how much premium to charge them based on their apparent needs. This interaction between the consumer and the insurance company can be characterized as a game because not only are they playing against one another but each party is waging on an outcome more beneficial to them. In a traditional life insurance, there are many variables to consider when utilizing game theory to form a strategy as there are investment components along with complex riders. Thus, in order to keep the game relatively simple, this paper will assume the insurance being considered is term life and use game

In the DC plan, the final benefits are unknown, but there are fixed contributions whereas in the DC plan, because there is promise of a numerical benefit, the contributions vary as a result of time value of money. This fundamentally means that the risk for the final benefit payout in the DB plan is borne by the employer whereas in the DC plan, the pensioner bears this risk (Beechy & Conrad, 2008). Contributions to a pension fund are an expense for the employer, hence to describe in simple terms, on a per pay basis, an employer will credit the pension fund with amount of pension funds the employee is entitled to. This amount is the present value of the future payment stream payable to the employee upon retirement (Beechy & Conrad, 2008). The present value calculations of these obligations require estimates of factors such as: investment earnings, future salary increases, employee turnover, mortality rates, and life expectancy after retirement (Beechy & Conrad, 2008). Actuarial models are used to generate the probabilities used to calculate the pension obligation today, that will result in the promised payout in the future. While companies do not have to worry about the funding status of DC plans, those that offer the DB plan bear the perpetual burden of ensuring that the plans are funded. There are three basic actuarial methods that can be used by an employer to fund the plan. The first method is the accumulated benefit

As you may realize, the new product, Universal Life, is very different from other traditional life insurance products. I would recommend this new product, as its flexibility may be attractive and novel to our prospective

Our pension plan member, Mr. Smith is considering revising his pension plan. In his original plan, he was entitled to a benefit of $1000 per month, in advance, for life of age 65, with no guarantee. Now, he prefers to take a lower benefit, with a 10-year guarantee. If the revised benefit is not lower than $950, he will accept the new pension plan.

Super funds are either accumulation funds or defined funds, accumulated contribution funds are the most common type of superannuation fund and they act as a bank account, however the benefits made by them are not capital guaranteed which means that the benefits may be depreciated due to negative investment returns. These are the sorts of investment risks that comes with superannuation. Administration charges, policy fees, insurance premiums and taxes are deducted from members account. Defined benefit funds are based off a formula using the member’s final salary and the years of their employment. This fund also holds investment risk as if the investment is too high the amount that the employer is required to contribute to the fund can reduce and contributions may not be needed.

It gives a 60 days money guarantee to those clients who see the program not useful

Life insurance provides a guarantee of compensation in the case of loss of life in return for a payment of a premium paid to a company. Life insurance, in different forms, may be offered by many companies as part of a comprehensive benefits package. It is a significant benefit as it provides family members with financial assistance and peace of mind in the event of death. There are several different options for to choose from and deciding what options are best for each will depend on several factors and the advantages of each option and the goals of each. This paper will define the different insurance programs that may be available in organization 's compensation and benefits package precisely term life insurance, universal, whole life insurance, accidental death & dismemberment, and long and short-term disability insurance. It will further outline the advantages of each.

 It is the most common mechanism by which the insurer receives information about risks to be insured.