Considerations For Ascertaining Term Insurance in a Fair Value Context

  • R. Thomas  Herget
Part of the The New York University Salomon Center Series on Financial Markets and Institutions book series (SALO, volume 5)


Much has been written and discussed about fair-value determination and accounting for fund products. This chapter delves into these concepts for a life insurance product by addressing a Monte Carlo approach to fair-value determination and reporting using a simple term insurance product. We look at the major risk elements of a term insurance product and establish a Monte Carlo method that addresses these risks. We look at the results of an initial valuation, age the block, and present successive financial results and statements. Issues regarding the presentation of fair-value results are identified and addressed. Finally, implementation issues and anticipated consequences for the financial reporting actuary are discussed.


Monte Carlo Approach Income Statement Time Graph Investment Income Invest Asset 
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  2. Bragg, John M. (1998) New CSO Tables are Needed. National Underwriter, September 14, p. 7. Dukes, Jeffrey, and Andrew M. MacDonald. (1980). Pricing a Select and Ultimate Term Product. Transactions of the Society of Actuaries, XXXII, 547-565.Google Scholar
  3. Becker, David, and Theodore Kitsos. (1984). Pricing for Profitability in Annual Renewable Term. Best’s Review (September), 26.Google Scholar

Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • R. Thomas  Herget
    • 1
  1. 1.PolySystems, Inc.USA

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