Notes on the Use of Scales of Premium reduced in anticipation of future Bonuses

Extract

The idea of reducing the ordinary with-profit premiums in anticipation of such future bonuses as past experience shows may be safely reckoned upon, is not a modern one. The adoption of such tables has, however, become more common in recent years; and since their use involves the consideration of various practical points of importance—such as the basis upon which the reductions should be computed, the reserves and surrender-values attaching to the policies, the course to be pursued when the profits exceed or fall short of their anticipated amount, and the manner in which the calculations are affected by changes in the rate of interest and mortality—the subject appears to be one well suitable for discussion by this Institute.