A theory of bonus in life insurance

The issue of bonus in life insurance is considered in a model framework where the traditional set-up is extended by letting the experience basis (mortality, interest, etc.) be stochastic. A novel definition of the technical surplus on an insurance contract is proposed, and basic principles for its repayment as bonus are discussed. Making the experience basis an endogenous part of the model opens possibilities of model-based prognostication of future bonuses. Numerical illustrations are provided.

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Year of publication:	1999-08-20
Authors:	Norberg, Ragnar
Published in:	Finance and Stochastics. - Springer. - Vol. 3.1999, 4, p. 373-390
Publisher:	Springer
Subject:	Safety margins \| prospective reserves \| retrospective reserves \| stochastic interest \| stochastic mortality \| counting processes

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Extent:	application/pdf
Type of publication:	Article
Notes:	received: January 1998; final version received: September 1998
Classification:	G22 - Insurance; Insurance Companies ; G23 - Pension Funds; Other Private Financial Institutions
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005613415