There are three elements of fair market value for life insurance or life insurance-linked instruments (such as split-dollar collateral assignment receivables or split-dollar promissory notes), according to a new white paper from Pluris Valuation Advisers LLC. The three elements are: (1) the illustrations from the insurance company projecting expenses, premiums, and cash values; (2) the mortality rates applicable to the insured life as of the valuation date; and (3) the discount rates applicable to the cash flows from the policy as of any given year.

More details are in the white paper, titled Life Insurance Valuation—Mortality and Discount Rates.