A theory of bonus in life insurance
The issue of bonus in life insurance is considered in a model framework where the traditional set-up is extended by letting the experience basis (mortality, interest, etc.) be stochastic. A novel definition of the technical surplus on an insurance contract is proposed, and basic principles for its repayment as bonus are discussed. Making the experience basis an endogenous part of the model opens possibilities of model-based prognostication of future bonuses. Numerical illustrations are provided.
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Volume (Year): 3 (1999)
Issue (Month): 4 ()
|Note:||received: January 1998; final version received: September 1998|
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/mathematics/quantitative+finance/journal/780/PS2|
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