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Joint Life Insurance Policies with Differential Benefits and Premiums to the Policyholders


  • Das Shubhabrata

    (Institute of Management (IIM), India)


In this paper, we explore actuarial justification for equal or unequal sharing of premiums and benefits between policyholders in a product involving joint lives. The analysis reveals a fundamental difference between endowment and assurance types of products in this regard. In assurance plans, there is a clear basis for differential structure in terms of sharing premium payment. In pure endowment plans, the default system of equal premium for equal benefit may be more justified although implications of other alternatives are also considered. A justification is derived for such an alternative through appropriate discount figures as compared to individual live policies. We also suggest an alternative actuarial principle to deal with joint endowment plans: solutions have been worked out under this framework. While lives are considered to be independent for a major part of this work, the implications of dependency have also been presented here with special reference to common shock model and copula models.

Suggested Citation

  • Das Shubhabrata, 2008. "Joint Life Insurance Policies with Differential Benefits and Premiums to the Policyholders," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 2(2), pages 1-19, March.
  • Handle: RePEc:bpj:apjrin:v:2:y:2008:i:2:n:1

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    References listed on IDEAS

    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
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