The pricing of conventional life insurance Products by reflecting mortality risks

Abstract

This project paper discusses the life insurance product pricing by showing how insurers estimate their costs of providing a product's benefits and incorporating this cost into the product's price, along with an underwriting margin. This study considers/investigates how insurers calculate the net premiums. It is noted that mortality is the main factor of determining the cost of insurance products hence we analyse the effect of varying mortality experience on the various types of mortality tables and explains how insurers incorporate benefit costs into the prices of various types of life insurance products and annuities. The project utilises the data from Relevant Morality Tables from Faculty and Institute of Actuaries, Research work on Kenya Mortality Tables from Population and Research Institute of University of Nairobi, Insurance Act 1984& Insurance Schedules for actuarial bases, mortality data from the insurance industry in Kenya.