Calculation of benefit reserves based on true m-thly benefit premiums

Abstract

Life insurance is a form of insurance that provides risk mitigation in life or death of a human. One of its advantages is measured life insurance. Insurance companies ought to give a sum of money as reserves to the customers. The benefit reserves are an alternative calculation which involves net and cost premiums. An insured may pay a series of benefit premiums to an insurer equivalent, at the date of policy issue, to the sum of to be paid on the death of the insured, or on survival of the insured to the maturity date. A balancing item is required and this item is a liability for one of the parties and the other is an asset. The balancing item, in loan, is the outstanding principle, an asset for the lender and the liability for the borrower. In this paper we examined the benefit reserves formulas corresponding to the formulas for true m-thly benefit premiums by the prospective method. This method specifies that, the reserves at the end of the first year are zero. Several principles can be used for the determined of benefit premiums, an equivalence relation is established in our discussion.