Pricing a Waiver of Premium Upon Disability

Development of approaches to price a waiver of premium upon disability rider based on provision terms set forth by John Hancock Insurance and available data. Approaches involved random variables; age at disablement, duration of disability, and age at death. A rider premium was calculated such that the random loss (a function of those random variables) had an expected value of zero. Through data collection and SAS programming, an expense-loaded rider premium was calculated as a percentage of base premium.