Yearly Price Of Protection Method
What Does Yearly Price Of Protection Method Mean?
The Yearly Price of Protection Method is a procedure employed by professionals in actuarial sciences within the insurance industry. Actuaries commonly use this method to calculate the annual cost of protection for a cash value life insurance policy, which typically includes a savings component.
Insuranceopedia Explains Yearly Price Of Protection Method
The Yearly Price of Protection Method is utilized in calculations involving estimates of insurance probabilities. In these calculations, actuaries first determine the cash value accumulated in the policy at the beginning of the year. They then add all the premiums paid during that year to this amount.
Subsequently, they multiply the resulting sum by the assumed interest rate. This process enables them to calculate the forecasted or projected cash surrender value of the policy.
