A Multiple State Model for Premium Calculation when Several Premium-Paid States are Involved

Joanna Dębicka () and Beata Zmyślona
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Joanna Dębicka: Wrocław University of Economics
Beata Zmyślona: Wrocław University of Economics

Central European Journal of Economic Modelling and Econometrics, 2018, vol. 10, issue 1, 27-52

Abstract: The aim of this contribution is to derive a general matrix formula for the netperiod premium paid in more than one state. In order to avoid "overpayment" which implies higher premiums we give a formula for replacement of lump sum benefit into annuity benefits paid in more than one state. The obtained result is useful for example to more advanced models of dread disease insurances allowing period premiums paid by both healthy and ill person (e.g. not terminally yet). As an application, we supply analysis of dread disease insurances against the risk of lung cancer based on the actual data for the Lower Silesian Voivodship in Poland.

Keywords: modified multiple state model; net premium; life annuity; criticalillness insurance; accelerated death benefits (search for similar items in EconPapers)
JEL-codes: G22 I13 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:psc:journl:v:10:y:2018:i:1:p:27-52

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