Calculate and interpret profit signature, profit vector, net present value, internal rate of return, profit margin, and discounted payback period for long-term life and health insurance, and annuity contracts.
Free SOA Exam ALTAM (Advanced Long-Term Actuarial Mathematics) lesson in Profit Analysis. 77 min read, ~11,513 words.
Profit vector is end-of-year cash per policy in force at start of year; profit signature is per policy issued and is the series you discount. NPV discounts at the risk discount rate, never the earned rate; accept when NPV 0. The roll-up inside uses. The hurdle exceeds the earned rate...
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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
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 4c
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