APPLICATION PROGRAM DEVELOPMENT FOR CALCULATING PREMIUM RESERVES USING FULL PRELIMINARY TERM METHOD AND COMMISSIONER’S METHOD

Abstract

Based on the results of this study which is shown in previous chapters, it can be concluded that: 1. Calculation of premium reserves for endowment life insurance using the Full Preliminary Term method and the Commissioner's method are carried out in the same way, namely calculating life annuity-due, net single premium, and net annual premium, from which premium reserves can be obtained. 2. As the Commissioner's method is an extension of the Full Preliminary Term method, what is modified is the net annual premium of the Full Preliminary Term. The difference between the two methods lies in the premium paid in the first period of the insurance contract. The Full Preliminary Term method will produce smaller premium reserves because the first year's premium reserves are considered zero to cover initial costs and avoid negative premium reserves. Both methods will result in the same compensation at the end of the period which means that the company will be able to return the full compensation to the policyholder. 3. The application program for calculating premium reserves using the Full Preliminary Term method and the Commissioner's method using Microsoft Excel and Excel Visual Basic for Application (VBA) constructed in this study is proven to be a free tool that can be useful for actuaries or insurance professionals in speeding up and producing accurate calculations without having to buy an automation application which is sometimes considered expensive and its use is more complex.