We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is the Value of in-Force?

Malcolm Tatum
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

"The value of in-force" is a term that is often used in the insurance industry, particularly with life insurance. This term specifically has to do with the amount of current or present value of the profits that owners and investors of the life insurance company anticipate will be realized from a group of life insurance policies over a period of time. Projecting this figure is key to insurance providers, since it helps to determine if the provider will remain solvent over the long term and generate some sort of profit above and beyond honoring claims submitted by customers.

Since providing life insurance is considered a type of in-force business, owners must project the revenue stream, operational costs and ultimately the net profit that is realized from the business endeavor. This process involves considering the present value of all the policies currently written and projecting what type of revenue will be generated from those policies up to the point of settling claims on those insurance contracts. Doing so makes it easier to determine if new policies are being written at a pace that helps to balance the payouts, effectively keeping the company solvent. It also helps to determine if the investments held by the insurer are producing a sufficient return to help support the overall business model. When this is the cause, the value of in-force is considered positive and the provider is highly likely to remain in business.

Calculating the value of in-force requires identifying the current present value of life policies current written, with an eye toward the amount of premiums that are generated by those policies. When paired with the returns from the investment of those premiums, the resulting revenue stream can be compared to expenses and it will be possible to determine what if any changes in current strategies must be made in order to sustain the operation. Typically, insurance providers will calculate the value of in-force on a regular basis, making sure the volume of new policies written is sufficient to offset the number of policies that have been settled since the last calculation.

The frequency of determining the value of in-force will vary somewhat. It is not unusual for some insurance providers to project this value at the end of each billing period. Others may choose to determine this figure on a quarterly basis. The frequency is sometimes determined based on the rate of turnover in new policies to settled policies that occur on average per accounting month.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.