Life Insurance Policy Valuation
Our model is designed to capture the present value of the future economic
benefits (cash flows) to be generated from the life insurance policy.
The value of a life insurance policy may be directly affected by the following factors:
- Term remaining on the policy
- Amount of the policy premiums
- Timing of the policy premiums
- Age of insured
- Risk associated with the policy premiums being paid in the future
- Volatility of the S&P 500 and the expected returns of the policy
- Credit worthiness of insurance carrier
- Required rates of returns historically generated by publicly traded common stock
- Amount of cash withdraws or loans expected to be taken form the policy
- Timing of the cash withdraws or loans to be taken from the policy
- Amount of the death benefit
- Timing of the payment of the death benefit based upon the actuarial life tables