Year: 2026
Type: article
Abstract: Human life is full of uncertainties that create financial risks, especially the risk of death which increases with age. Therefore, life insurance is needed as a financial protection tool that transfers the risk from individuals to insurance companies. To maintain financial stability, insurance companies are required by the Financial Services Authority Regulation Number 71/POJK.05/2016 to calculate premium reserves accurately. One of the main life insurance products is whole life insurance, which provides lifetime protection and pays benefits to beneficiaries upon the death of the insured at any time. There are two major methods of calculating premium reserves, namely the Prospective and retrospective methods. This study applies the Prospective method, which calculates the reserve as the difference between the present value of future benefits and the present value of future premiums. The purpose of this study is to calculate the premium reserve for whole life insurance involving more than one insured individual. The mortality basis used is the 2019 Indonesian Mortality Table from the Indonesian Life Insurance Association, while the interest rate applied is the BI-Rate of 5.75% as of January 2025. The results show that the premium reserve reached IDR 80,102,511.87 at the 74th policy year and decreased to IDR 79,926,374.14 in the 75th year. This decline occurred because the present value of future benefits decreased as the insured aged. Based on the results, the Prospective method offers a practical approach for estimating reserves that align with the company’s long-term obligations.
Institution: President University
Language: English
Subfield: Demography
Field: Social Sciences
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7202285151