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Thread: Life insurance - negative risk premium for small t

  1. November 22nd 2012, 07:24 AM #1
    randomLEMPL
    randomLEMPL is offline
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    Life insurance - negative risk premium for small t

    Hi there,

    I have been solving few simple problems in life insurance math and this thing doesn't make sense to me, better said I have no idea how to interpret such result.
    When t (t-year; it is used in order to calculate prospective/respective reserve) is a small number, the risk premium part of the premium tends to be negative. Why is that so? How would you interpret that?
    Attached Thumbnails Attached Thumbnails Life insurance - negative risk premium for small t-premium.jpg  
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