Which life insurance cost comparison method will show the cost of the policy if it is surrendered?
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journal article Consumer Valuation of Life Insurance. A Capital Budgeting ApproachThe Journal of Risk and Insurance Vol. 41, No. 4 (Dec., 1974) , pp. 655-665 (11 pages) Published By: American Risk and Insurance Association https://doi.org/10.2307/251961 https://www.jstor.org/stable/251961
Read and download Log in through your school or library Alternate access options For independent researchers Read Online Read 100 articles/month free Subscribe to JPASS Unlimited reading + 10 downloads Purchase article $9.00 - Download now and later Abstract The Capital Budgeting Approach has been suggested as a method whereby the consumer may estimate the cost of his life insurance, by several authors. Many cost methods include parts of a formal capital budgeting model. But none to date has treated the purchase of life insurance as a pure capital budgeting decision. This article takes the consumer's viewpoint. Assumptions of lapse are not relevant to the consumer because he faces a lapse rate of one or zero in each year depending on whether he pays his premium. For life companies, lapse rates are vital to calculate an asset share accurately. The result of the Capital Budgeting Approach is a cost method that is more easily understood by both the consumer and the agent and that fairly reflects company decisions relative to high early cash values and dividends. Journal Information The Journal of Risk and Insurance publishes rigorous, original research in insurance economics and risk management. This includes the following areas of specialization: (1) industrial organization of insurance markets; (2) management of risks in the private and public sectors; (3) insurance finance, financial pricing, financial management; (4) economics of employee benefits, pension plans, and social insurance; (5) utility theory, demand for insurance, moral hazard, and adverse selection; (6) insurance regulation; (7) actuarial and statistical methodology; and (8) economics of insurance institutions. Both theoretical and empirical submissions are encouraged. Empirical work should provide tests of hypotheses based on sound theoretical foundations. JSTOR provides a digital archive of the print version of The Journal of Risk and Insurance. The electronic version of The Journal of Risk and Insurance is available at http://www.blackwell-synergy.com/servlet/useragent?func=showIssues&code;=jori. Authorized users may be able to access the full text articles at this site. Publisher Information The American Risk and Insurance Association (ARIA) is a worldwide group of academic, professional, and regulatory leaders in insurance, risk management, and related areas, joined together to advance the study and understanding of the field. Founded in 1932, ARIA emphasizes research relevant to the operational concerns and functions of insurance and risk management professionals and provides resources, information, and support on important insurance and risk management issues. Two main goals of the organization are 1) to expand and improve academic instruction of risk management and insurance, and, 2) to encourage research on all significant aspects of risk management and insurance. Rights & Usage This item is part of a JSTOR Collection. AAge
Annuity
Application Form
Synonyms: Proposal Form Assignment
BBancassurance
Bundled Product Disclosure document
CCareShield Life
Cash Dividend
Cash Value
Synonyms: Surrender Value Claim
Co-Insurance
Commission
compareFIRST
Cover Page
Coverage
CPF DPS
CPF LIFE
Critical Illness Insurance
Customer Knowledge Assessment (CKA)
DDeath Benefit
Deductibles
Direct Purchase Insurance (DPI)
Disability
Disability Benefit
Disability Income Insurance
Dispute Resolution
EElderShield
Endowment Policy
Exclusions
FFact-Find Process
Financial Advisory (FA) Representative
Forfeiture
Free Look
GGrace Period
HHospital Cash Insurance
IIndemnity
Integrated Shield Plans
Interim Cover against Death by Accident
Investment-Linked Insurance
LLiving Benefits
Synonyms: Accelerated death benefits Long-Term Care Insurance
MMaturity Date
Medical Expense Insurance
Medisave
MediShield Life
NNomination of insurance beneficiary
Non-Forfeiture Values
Non-Participating Policy
PPaid-up Value
Participating Policy
Policy
Policy Illustration
Policy Loan
Premium
Product Summary
RRegular Premium Policy
Reinstatement
Reports on your Policy
Reversionary Bonus
Rider
Risk Profile
SSelected Client
Single Premium Policy
Suicide
Sum Insured
Surrender Value
TTerm Insurance
Terminal Bonus
Time Horizon
UUnit Trust
Synonyms: Collective Investment Scheme (CIS) Universal Life Insurance
• Protection-oriented universal life plans that provide high insurance coverage, these are typically whole of life plans; or
VVoiding a policy
WWaiver of Premium
Whole Life Insurance
What type of life insurance has a cash surrender value?Whole life insurance, variable life insurance and universal life insurance all have cash value components, which means that if you surrender your policy, you may get some money back. Term life insurance does not offer a cash value option.
What happens when a policy is surrendered for its cash value?What happens when a policy is surrendered for cash value? When a policy is surrendered, you'll lose coverage and no longer be responsible for paying insurance premiums. If your policy has cash value, you'll get this money after surrender fees have been taken into account.
What is surrender charge on life insurance?A surrender charge, also called a surrender fee, is levied on a life insurance policyholder upon cancellation. The fee is used to cover the costs of keeping the insurance policy on the insurance provider's books.
How do you record cash surrender value of life insurance?The cash surrender value of the life insurance policy is an asset that is recorded on the balance sheet (“B/S”) of the company. The amount recorded varies from year to year as the cash surrender value of the policy increases or decreases.
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