On the Valuation of Industrial Assurance Policies

Extract

The general principles on which a valuation should be made are the same for Industrial as for Ordinary Assurance policies, but the differences between the two classes of business necessitate considerable difference in the methods by which these principles are applied.

The greater number of Industrial Assurance policies are issued on the basis of the weekly payment of id. and small multiples of id., the premiums being collected weekly by agents. The average sum assured is consequently small and the expense of collection relatively great. Medical examination is not asked for except in special cases, the agents being required to form their own opinion of the eligibility for insurance of the proposer. The effects of serious errors of judgment in this matter are minimised by the usual condition that a proportion only—usually one quarter—of the sum assured shall be paid should death occur otherwise than by accident during the first three or six months of the assurance; the proportion being increased to one-half for the second period of three or six months; and the full sum assured being payable thereafter.