Credited Rates

CFA Level III
#1

Can any one explain in plain english what is credited rates - Life insurance goals - Maximize Net Interest Spread = Portfolio Interest Earned - Credited Rate applied to policy holders account Is Credited rate some kind of allocation of estimated death benefit based on mortality rates

#2

I think credited Rate shall be the return rate committed to policy holders for those policies with the characteristics of investment (not just insurance). Any one confirm ?

#3

mate there are 6 books to learn before the exam in 3 weeks and you are wondering what a credited rate is?just know 'maximize interest spread" and is more than enough if we see a life insurance case

#4

GOAL = earn more than you pay out

#5

alta168 Wrote: ------------------------------------------------------- > I think credited Rate shall be the return rate > committed to policy holders for those policies > with the characteristics of investment (not just > insurance). Any one confirm ? Credited rate is the weighted average contractual rate applied to all policies issued. GICS/LI/Annuities/etc. In theory weighted average duration should be equal between policies receiving a credited rate (liabilities) and assets. With duration of surplus and asset make up of surplus up to investment committee.

#6

Thanks.