What is ‘Validation Period’
The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy. The validation period is the period of time that passes before an insurance product becomes profitable or until the product can start to contribute to surplus.
Also known as the break-even period.
Explaining ‘Validation Period’
The validation period is the time period that an insurer needs to amortize the expenses associated with establishing a life insurance policy. The length of the validation period varies with the policy and the associated costs. The validation period is important because it helps the insurer determine the length of time it takes until that policyholder is profitable for the company.
Further Reading
- Deep learning for finance: deep portfolios – onlinelibrary.wiley.com [PDF]
- A bootstrap evaluation of the effect of data splitting on financial time series – ieeexplore.ieee.org [PDF]
- Validation of agent-based models in economics and finance – link.springer.com [PDF]
- Validating and calibrating agent-based models: a case study – link.springer.com [PDF]
- A cross‐validation analysis of neural network out‐of‐sample performance in exchange rate forecasting – onlinelibrary.wiley.com [PDF]
- Financial applications of discriminant analysis: a clarification – www.jstor.org [PDF]
- CAPM and APT validation test before, during, and after financial crisis in emerging market: evidence from Indonesia – papers.ssrn.com [PDF]
- Different approaches to forecast interval time series: a comparison in finance – link.springer.com [PDF]
- Empirical validation on excess volatility puzzle – www.globalpresshub.com [PDF]
- Validation Panzar-Rosse Model in determining the structural characteristics of Tunisian banking industry – academicjournals.org [PDF]
