| Summary: | Annuity insurers were making losses by underestimating mortality improvement. If the same projection fault occurs for term assurance policies, life insurers writing term assurance policies were likely to have benefited from the improving mortality and the profit could be significant in comparison with annuities. This dissertation uses quantitative research method by developing cash flows for term policies and using the moneys worth ratio and profit ratio to test the policys profitability.
The result shows that life insurers writing term assurance policies have benefited from the improving mortality. In particular, term policy for older lives has shown significant profit. In addition, life insurers have benefited more from long term policies than short term, policies for elders benefited more than for the young, and policies for nonsmokers benefited more than for combined policies (nonsmokers and smokers).
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