Yearly Price Of Protection Method

AAA

DEFINITION of 'Yearly Price Of Protection Method'

A method used in actuarial analysis, which is often used in the insurance industry. The Yearly Price Of Protection Method is used to find out the cost of protection of a policy that includes a savings component such as a cash value life insurance policy. It relates to computations that involve insurance probability estimates.

INVESTOPEDIA EXPLAINS 'Yearly Price Of Protection Method'

The cost of this protection is based on the cash value at the beginning of the year plus premiums paid for that year. The determined total is multiplied by an assumed interest rate factor of (1+i). The result equals the part of the life insurance premiums paid that can be received if the policy is canceled, in other words, the cash surrender value which only applies to ordinary life and limited policies, not term insurance.

RELATED TERMS
  1. Yearly Probability Of Living

    A numerical figure that depicts the likelihood of someone living ...
  2. Casualty Actuarial Society - CAS

    The Casualty Actuarial Society (CAS) is a professional society ...
  3. Canadian Institute Of Actuaries ...

    The Canadian Institute of Actuaries, or CIA, is an organization ...
  4. Actuarial Adjustment

    A revision made to reserves, premiums and other values based ...
  5. Actuarial Analysis

    The examination of risk by a highly educated and certified professional ...
  6. Actuarial Gain Or Loss

    Gain or loss arising from the difference between estimates and ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Home & Auto

    A Look At Single-Premium Life Insurance

    Want to provide for your dependents and finance your own long-term care? Learn more here.
  2. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  3. Savings

    6 Retirement Savings Tips For 45- To 54-Year-Olds

    Now is the time to kick savings into high gear. Find out how.
  4. Taxes

    9 Penalty-Free IRA Withdrawals

    If you need to take early distributions, find out which exemptions allow you to avoid expensive consequences.
  5. Options & Futures

    Choosing The Best Disability Insurance

    Social Security benefits can be hard to collect. Find out why you need disability insurance to protect your income, and learn how to choose the right policy for you.
  6. Retirement

    Variable Vs. Variable Universal Life Insurance

    Do you know why you might need one policy versus the other? Read on to find out.
  7. Home & Auto

    Long-Term Care Insurance: Who Needs It?

    No one is immune to the possibility of one day needing long-term care - and the costs can deplete a life savings.
  8. Options & Futures

    Long-Term Care Insurance: You Have Options

    The latest offerings provide more coverage and the ability to pick and choose what types of coverage you'll need.
  9. Investing

    What's a Debit Note?

    A debit note is a document used by a seller to inform a purchaser of a dollar amount owed. As the name indicates, it is a note from the seller that a debit has been made to the purchaser’s account. ...
  10. Investing

    What's Capitalization?

    Capitalization has different meanings depending on the context.

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center