Yearly Price of Protection Method

Yearly price of protection method is a method of analytically analysis. This analytic analysis method is mostly used in the insurance industry. This method called yearly price of protection method is used to find out the cost of protection of the insurance policy along with inclusive cost of savings component for example the cash value of the insurance policy. The yearly price of protection method is used to calculate and compute that involve the insurance probability estimations of the policy in question.

The cost of this protection method is based on the cash value of the insurance policy included the premium paid on this cash value paid on the basis on the cash value of that policy. A total is determined by adding both the cash value and the premium paid for an insurance policy and the total amount is multiplied by an assumed interest rate factor which can be called as “r”. The interest rate factor can be shown as r=(1+i). The result of adding the interest factor is the amount of insurance that is paid for that policy for the life time for which the premiums are paid.  This premium can be acquired even if the policy is cancelled by the policy holder. In other words we can explain in fact in the words that policy cash surrenders only that value that applies only to the daily life and limited number of policies not the term insurance.



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