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 Analysis

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

    Gain or loss arising from the difference between estimates and ...
  6. Actuarial Adjustment

    A revision made to reserves, premiums and other values based ...
Related Articles
  1. A Look At Single-Premium Life Insurance
    Home & Auto

    A Look At Single-Premium Life Insurance

  2. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  3. 6 Retirement Savings Tips For 45- To ...
    Savings

    6 Retirement Savings Tips For 45- To ...

  4. 9 Penalty-Free IRA Withdrawals
    Taxes

    9 Penalty-Free IRA Withdrawals

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center