Scoring Methodology of Life Protection

Whole Life Protection Insurance combines long-term life insurance with savings. Protection and return are the major components of whole life insurance. Protection refers to the death benefit compensated to the beneficiary if the insured passes away. Return refers to the rates of the savings return provided by the insurer after the policy is in force for a certain period. Breakeven period is the year when the value of the policy exceeds the accumulated premiums paid. In particular, Whole Life Protection products focus on life coverage (death benefit).


General Assumptions

  • The insured is 35-year-old male, non-smoker
  • USD100,000 Total Premium 
  • Premium term of 1, 5, 10, 15, 20, 25, 30 years paid annually on time
  • No policy loan, partial cash value and/or dividends/bonus redemptions made during the specified policy period


1. Life Protection Score

This score measures the benefit multiplier of the amount that the beneficiary receives in the event of death of the insured. The higher the benefit multiplier, the higher the leverage and the higher the death benefit score. The detailed methodology is as follows:

1.1 Guaranteed Death Benefit is considered

Some of the death benefits are guaranteed by the insurer, some are projected (i.e. not guaranteed). Our model measures the guaranteed death benefit that the insurer is obligated to pay the beneficiary, and non-guaranteed death benefits are not counted. Guarantees are more important when it comes to providing financial protection in difficult times.

1.2 Calculating the Guaranteed Death Benefit Multiplier


1.3 Comparing Guaranteed Death Benefit Multipliers at different time horizons

The death benefit may vary at different times during the policy period depending on the product design. Some may focus on early years coverage, and some may focus on long term coverage. We consider guaranteed death benefit multipliers at the first 20 years (age 35-54) and 21-50 (age 55-84) years for a comprehensive comparison, using the 90th percentile of cash values in the market as benchmark. 




The score is based on the average of the scores at these two time horizons. As the need of life protection is more important in early years, more weight is put on the early years coverage score. 

 

 

Early Years Coverage Score

(age 35-54)

Long Term Coverage Score

(age 55-84)

Life Protection Score

60%

40%



 

10Life scores are for reference only, and do not constitute any insurance purchase advice. You should seek independent advice from licensed insurance advisors before purchasing any insurance products. If you have any questions or suggestions about the above methodology, please email us at enquiries@10Life.com.

 

Updated on 19 July, 2022

 

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