Title

Net Level Premium Application: A look at Smokers vs. Nonsmoker’s

Presenter Information

Sarah Flatebo

Document Type

Oral Presentation

Location

SURC 202

Start Date

16-5-2013

End Date

16-5-2013

Abstract

Like health insurance, life insurance is a continuously growing and complex field that affects almost everyone, and yet not many people know what goes into pricing the premiums of different people. It involves many complicated aspects including life tables, mortality rates, and other risk factors including smoking. Smoking is one of the few legal risk discriminative factors. This spreadsheet application takes a small glimpse into how different types of premiums are priced. This application focuses on standard pricing of insurance contracts issued to policyholders who are smokers versus nonsmokers. It aims to help people get an idea of the key aspects that go into their premium pricing and how much impact a lifestyle such as smoking increases someone’s premium. The mortality rates used in this application are from an industrial table called: “1980 CSO Smoker and Non-Smoker Mortality Rates” that was developed by actuaries. The table was then used by computer codes to find different premiums for a user who input their own information. Inputs include the user’s age, interest rate, the benefit amount, and the term of life policy. This application runs the users input to find the premium rates of various insurance contracts so the user can see their options and the premium difference caused by smoking status.

Faculty Mentor(s)

Yvonne Chueh

Additional Mentoring Department

Actuarial Science

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May 16th, 12:00 PM May 16th, 12:20 PM

Net Level Premium Application: A look at Smokers vs. Nonsmoker’s

SURC 202

Like health insurance, life insurance is a continuously growing and complex field that affects almost everyone, and yet not many people know what goes into pricing the premiums of different people. It involves many complicated aspects including life tables, mortality rates, and other risk factors including smoking. Smoking is one of the few legal risk discriminative factors. This spreadsheet application takes a small glimpse into how different types of premiums are priced. This application focuses on standard pricing of insurance contracts issued to policyholders who are smokers versus nonsmokers. It aims to help people get an idea of the key aspects that go into their premium pricing and how much impact a lifestyle such as smoking increases someone’s premium. The mortality rates used in this application are from an industrial table called: “1980 CSO Smoker and Non-Smoker Mortality Rates” that was developed by actuaries. The table was then used by computer codes to find different premiums for a user who input their own information. Inputs include the user’s age, interest rate, the benefit amount, and the term of life policy. This application runs the users input to find the premium rates of various insurance contracts so the user can see their options and the premium difference caused by smoking status.