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Chapter21, reducing valuation interest rate when using net premium valuaton.

U

uktous

Member
Hi,

When using net premium valuation, for a single premium policy, know that when I reduce the interest rate, the investment surplus would increase.

However, the reserves should rise in size.
Therefore the cost for increase in reserve in each year end should also increase.

Therefore, in term of "profit less cost for increasing reserve", should we should a low valuation rate for a single premium policy?
 
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