This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1897 edition. Excerpt: ... CHAPTER III. NET PREMIUMS. A net premium is one in the calculation of which due allowance has been made for the interest which a company may receive upon its investments, but with no allowance for the expenses of the business. Thus far we have, for the sake of simplicity, neglected the question of interest. But, since a company may realize considerable amounts in the way of interest upon judiciously invested funds, not needed for present use, it is plain that, in determining the premium which it is necessary to charge, due consideration of this source of income should be had. Obviously, the rate of premium will be reduced by the fact that interest receipts are to be added to the company's income. If too great a reduction is made, however, the premium will not be sufficient. And, as life insurance contracts may cover a very long period, premiums must be based upon assumptions which are likely to be realized in actual experience through an indefinite term of years. With this fact in view, 4 per cent has been taken as the probable rate of interest, in the calculation of premiums. The following explanation of the method of calculating a net annual premium for an insurance for the term of five years, presents only the very simplest form of such calculations, the design being rather to illustrate principles and the method of their application, than to present or attempt to demonstrate intricate mathematical problems. What should be the net annual premium (level) for an insurance of $1000, for the term of 5 years only, upon the life of a man aged 40, according to the American Experience Table with 4 per cent interest? An annuity is the recurring annual payment of a uniform amount. Consequently the annual premium is an annuity paid by the...