I was just thinking about how life insurance products get priced and relating this to CA1. Somewhere in CA1 (I think it was in the modelling chapter) they say that when pricing a life policy, we should discount the future profits and determine an appropriate premium to give the required profit criterion. If the policy is more "risky" then a higher discount rate should be used which will implicitly result in a higher premium. However, this is only true for regular premium policies and not single-premium polcies. A higher discount rate on a single-premium policy would mean a lower single premium as we will be discounting future losses (and not future profits as in a regular premium policy). If I were to think of the single premium as a reserve rather, then it makes sense as the discount rate used to calculate reserves is the investment return as opposed to risk discount rate. Am I correct in my thinking?
