Life insurance A contract in which one party agrees to pay a given sum upon the

Life insurance a contract in which one party agrees

This preview shows page 6 - 8 out of 59 pages.

Life insurance.* A contract in which one party agrees to pay a given sum upon the happening of a particular event contingent upon the duration of human life in consideration of a smaller sum or certain equivalent periodical payment by another. Life office base (LOB). Defined under the current tax rules. It combines underwriting profit (as defined in the legislation) and investment income less expenses. See also “policyholder base”. 1
Image of page 6

Subscribe to view the full document.

Margin on services (MoS). The MoS valuation method is used for valuing policy liabilities which, by incorporating profit margins in policy liabilities, seeks to release profit as it is earned through the provisions of services and the receipt of the related income. The New Zealand Society of Actuaries has a professional standard which covers the calculation of policy liabilities under the MoS method. Mortality. Actuaries use mortality tables that show, for a person at each age, what the probability is that they will die before their next birthday as well as statistics such as the probability of surviving to any particular year of age and remaining life expectancy for people at different ages. The tables usually take into account risk characteristics such as gender, age and smoking status, and can also have regard to occupation and socio-economic status. Outstanding claims reserve (OCR). A provision made by an insurance company for all claims that have been made and for which the insurer is liable, but which had not been settled at the balance sheet date. Participating policy ( also known as “with- profits policy”) . A policy that entitles the policyholder to participate in distributions of profit – as most whole of life and endowment policies are. Policyholder. The owner of an insurance policy, usually, but not always, the insured. Policyholder base (PHB).* The PHB is part of the two-tier calculation of life insurance income under current tax rules. It attempts to tax the economic income (subject to certain tax adjustments) of policyholders. (Also see “life office base”.) Policyholder income. New taxation rules proposed in this document that aim to tax the economic income (subject to certain tax adjustments) of policyholders. Portfolio investment entity (PIE). A collective investment vehicle that elects to be a PIE for tax purposes. The difference between PIEs and other investment vehicles is that PIEs are not subject to tax on trading in New Zealand and some listed Australian equities, and most PIEs may attribute income to individual investors and apply tax at their rate (subject to a cap of 30% from 1 April 2008). Premium.* The periodic payment made on an insurance policy. Premium loading.* The premium calculated from mortality and interest factors is a net premium, and adjustments, or loadings, will have to be made to arrive at the actual premium chargeable. The major loading is to cover the expenses of the life insurer. There will also be a safety margin to guard against higher than expected mortality and a profit margin. Tax legislation calculates premium loading by
Image of page 7
Image of page 8
  • Winter '14

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask bonus questions You can ask questions ( expire soon) You can ask questions (will expire )
Answers in as fast as 15 minutes