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pricing models ch16

T

TheProtea

Member
Hi
Can someone clarify the meaning of "charges" that the core reading refers to throughout ch16,
For example on pg3 the third last paragraph:
"The premium or charges for the model point can then be set so as to produce the profit required by the company."

Does charges (here) mean the amounts loaded by the insurer in order to cover its expenses, or the charges as in the premuims charged?

Thanks
 
I think the charges are the "deductions" in unit-linked contracts. The charges could be as % of fund (for example, say a 5% fund management charge) or could be a % of premium (for example, say 10% of each premium is taken as a charge to meet initial and renewal expenses) or there could be a mortality charge of qx.(Death benefit).
 
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