Application Of Annual Ratchet Method And Black-Scholes Model In The Calculation Of Single Net Premium Of Unit-Linked Endowment Life Insurance

Abstract

Given the dynamic market conditions, the calculation of a single net premium for unit-linked endowment life insurance becomes increasingly crucial to ensure a balance between life protection and potential investment returns. Insurance companies need to take into account market volatility and economic uncertainty in the premium setting process so that the products offered remain relevant and competitive in the eyes of the public. This research aims to calculate the net single premium value of unit-linked endowment life insurance using Annual Ratchet. It also aims to calculate the net single premium of unit-linked endowment life insurance using the Black Scholes model and aims to compare the calculation of net single premium of unit-linked endowment life insurance with the minimum benefit of the Annual Ratchet and Black Scholes methods using prospective calculations. There are two methods that will be used, namely the Annual Ratchet method and the Black-Scholes model. The results of the calculation of the net single premium of unit-linked endowment life insurance for the insured aged 40 years using the Annual Ratchet method for women amounted to Rp. 10,955,968 and men amounted to Rp. 13,725,243. While the results of the calculation of the single net premium of unit-linked endowment life insurance for the insured using the Black Scholes model for women amounted to Rp. 14,073,580 and men amounted to Rp. 17,672,045. The single net premium of unit-linked endowment life insurance for ages 45, 50, and 55 years shows an increase, both for women and men. This is due to the higher risk of death that makes the net single premium increase from year to year and the value of the investment plays a role.