Study on Assumptions for Fractional Ages in Life Insurance Lee, Soo-Bin; Cha, Ji-Hwan;
An assumption for fractional ages should be made to obtain the net premium of the whole life insurance payable at the moment of death based on the life table. Most existing studies adopt the assumption of the uniform distribution(UDD) for the fractional ages. However, as seasonal changes may frequently lead to the deaths of elderly people, it is questionable whether the assumption of the uniform distribution is the most appropriate one for the entire age intervals. In this article, based on a real mortality data set, the appropriateness of UDD assumption for the entire age intervals is examined. And then we propose a more suitable model for fractional ages. We analyze the effect of UDD assumption through the net premium and the corresponding risk when the true distribution for the fractional ages is not uniform.
Assumptions for fractional ages;UDD;net premium;risk;
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