Whole of Life Policy Calculator

Policy Inputs

Example Data Table

Formula Used

This model uses a simplified actuarial present value method.

• Discount factor: v = 1 / (1 + i)
• Yearly mortality: q(t) = q × (1 - m)^{t - 1}
• Survival at start of year: S(t - 1) = product of prior yearly survival rates
• Projected benefit: B(t) = Sum Assured × (1 + g)^{t - 1}
• Expected claim PV: S(t - 1) × q(t) × B(t) × v^t
• Net premium PV: S(t - 1) × Net Annual Premium × v^{t - 1}
• APV of benefits: sum of all yearly expected claim present values
• PV surplus or shortfall: PV of net premiums - APV of benefits

How to Use This Calculator

1. Enter the insured age and a terminal age for the model.
2. Add the sum assured and the premium paid each period.
3. Select payment frequency to convert each payment into annual premium flow.
4. Set premium paying years. Use 0 if premiums continue for life.
5. Enter interest, mortality, mortality improvement, benefit growth, and expense loading.
6. Click the calculate button to show the result under the header.
7. Review present value outputs, premium adequacy, and the projection table.
8. Use the CSV button for spreadsheet work and the PDF button for print export.

Whole of Life Policy Calculator Guide

Whole of Life Policy Calculator Overview

A whole of life policy calculator estimates the long-run cost and value of permanent life cover. It combines mortality, discounting, premium timing, and benefit growth. This gives a structured view of policy economics. It also helps you test how small assumption changes affect a lifelong contract.

Why This Model Is Useful

Whole life insurance can remain active for decades. That makes early pricing assumptions very important. A slightly lower interest rate can raise present value costs. A higher mortality rate can lift expected claims. Longer premium periods can improve funding strength. Scenario testing is therefore useful before comparing plans.

Key Inputs Included

This calculator uses current age, terminal age, sum assured, periodic premium, and payment frequency. It also uses annual interest, annual mortality, mortality improvement, benefit growth, expense loading, and premium paying years. Together, these inputs create a practical approximation for actuarial review, budgeting, and long-term protection planning.

How the Maths Works

Each future year has a survival probability and a death probability. The projected benefit is multiplied by the chance of death in that year. That creates an expected claim value. The discount factor then converts that future expected claim into present value. Premium value is built from premiums paid while the insured is alive at the start of each year.

How to Read the Results

The output reports actuarial present value of death benefits, present value of net premiums, reserve surplus or shortfall, adequacy ratio, and an estimated fair annual premium. It also estimates the probability of death before the selected terminal age. These measures help reveal whether the current premium pattern appears strong, weak, or roughly balanced.

Planning Scenarios

Try changing benefit growth when inflation protection matters. Adjust mortality improvement to test healthier future expectations. Shorten or lengthen premium years to examine affordability. Compare monthly and annual patterns by changing payment inputs. These scenario checks help users see how funding design alters long-term whole of life policy balance.

Important Use Notes

This calculator is best for education, sensitivity testing, and first-pass review. It does not replace an insurer illustration, underwriting result, or licensed advice. Real pricing may use detailed mortality tables, lapses, policy fees, bonuses, taxes, and product-specific rules. Still, the model gives a fast way to understand whole of life policy value with clear mathematical logic.

FAQs