Understand the implications of independence or dependence of future lifetimes in both versions of the joint life model. Identify sources of dependence and understand how they are accommodated in the models.
Free SOA Exam ALTAM (Advanced Long-Term Actuarial Mathematics) lesson in Joint Life Insurance and Annuities. 43 min read, ~6,462 words.
Two statuses: joint life fails on the FIRST death; last survivor fails on the SECOND. Identity:, so regardless of dependence. Sources of dependence: common shock, common lifestyle, broken-heart effect, shared environment, age/cohort similarity. Survival sign rule (positive dependence): independence UNDERSTATES and OVERSTATES. EPV/insurance sign rule (positive dependence): independence understates and...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Example 5
- Example 6
- Example 7
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 3b
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