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Unit Pricing

Published online by Cambridge University Press:  11 August 2014

T. W. Parry
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Extract

Unit-linked business has been with us for about 20 years. The original concept consisted of a life assurance policy under which the benefits were linked to the performance of a Unit Trust and the definition of unit pricing was therefore of no direct concern to the Insurance Company.

Subsequently, contracts were issued where the benefits were linked to the performance of an internal Unit Fund and the definition of unit pricing then became the direct concern of the Actuary.

This paper adopts a simplified approach to unit pricing and reviews some of the issues to be considered when calculating unit prices for an internal fund.

The paper does not consider the question of Unit Trust pricing nor have I attempted to provide a summary of historic and current practices or to provide any hard and fast rules, the aim being to concentrate on the principles involved.

Type
Research Article
Information
Journal of the Staple Inn Actuarial Society , Volume 26 , August 1983 , pp. 131 - 152
Copyright
Copyright © Institute of Actuaries Students' Society 1983

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References

REFERENCES

Bailey, W. G. (1962) ‘Some Points on Equity Linked Contracts’ J.I.A. 88, 319.Google Scholar
Brown, A. S., Ford, A., Seymour, P. A. C., Squires, R. J. and Wales, F. R., ‘Valuation of Individual Investment Linked Policies’ J.I.A. 105, 317.Google Scholar
Ford, A. (1969) ‘Assurances Linked to Unit Trusts’ J.S.S. 19, 87.Google Scholar
Grant, A. T. and Kingsnorth, G. A. (1967) ‘Unit Trusts and Equity Linked Endowment Assurances’ J.I.A. 93, 387.Google Scholar
Squires, R. J. (1974) ‘Unit Linked Assurances: Observations and Propositions’ J.I.A. 101, 1.Google Scholar