PRICING MODEL IN THE LIFE SETTLEMENT MARKETPLACE
An actuarial model is a mathematical model that uses statistical data to calculate the probability of an event occurring. In the life settlement marketplace, actuarial models are used to determine the value of a life insurance policy.
The value of a life insurance policy is based on several factors, including:
- Insured's life expectancy: The longer the insured is expected to live, the less valuable the life insurance policy is.
- Life insurance policy premiums: The higher the premiums, the less valuable the life insurance policy is.
- Life insurance policy cash value: The higher the cash value, the more valuable the life insurance policy is.
- Cash surrender value: The higher the cash surrender value, the more valuable the life insurance policy is.
Actuarial models use this data to calculate a specific price or pricing range for a life insurance policy. This price or pricing range is then used by life settlement providers to determine how much they are willing to pay for a life insurance policy.