Modified Premiun Reserve Analysis Using Commissioners Method in Whole Life Insurance

Abstract

Premium reserve is the difference between the premium amount and the amount of compensation. The amount of whole life insurance premium reserve is calculated using the Commissioners method with the Woolhouse formula. The Commissioners reserve states the relationship between the net premium and the modified premium, namely between the modified  and modified  on any policy and the age at issue. The amount of the Commissioners reserve is influenced by the initial annuity value with three payments per year, the single premium of whole life insurance with three payments per year, and the amount of the modified premium with three payments per year. The initial annuity value of whole life insurance with the Woolhouse formula is influenced by the interest rate, the insured's survival rate, accelerated mortality, and the number of payments per year. This study uses a quantitative approach. This method is used to minimize the costs that are quite high in the first year. The research sample was taken using a purposive sampling technique, namely the Indonesian Mortality Table (female) in 2019. The simulation of the calculation of Commissioners' reserves was carried out with different nominal compound interest rates, the age of the insured was 35 years, the premium payment period for the annuity calculation was 30 years, and the premium payment period was 35 years. The amount of Commissioners' reserves for a 40-year-old female insured, with   is Rp. 1,499,594.44. The amount of Commissioners' reserves for a 40-year-old female insured, with   is Rp. 1,609,498.67 Also, the amount of Commissioners' reserves for a 40-year-old female insured, with , is Rp. 1,670,281.62. The higher the nominal compound interest applied, the greater the Commissioners' reserves for a 40-year-old female insured. This research focuses on insurers who are bound by a life insurance contract to calculate the amount of modified premium reserves with  payments in one year using the Woolhouse formula in the Commissioners Method.