Use deterministic profit testing to calculate premiums or reserves, and assess emerging surplus for Universal Life insurance, including profit signature, profit vector, net present value, internal rate of return, profit margin, and discounted payback periods, under best estimate or stress test assumptions.
Free SOA Exam ALTAM (Advanced Long-Term Actuarial Mathematics) lesson in Universal Life Insurance. 36 min read, ~5,414 words.
Profit vector is profit per in-force policy at start of year; profit signature weights by survival from issue. NPV discounts the signature at the risk discount rate (RDR); positive NPV means accept. IRR solves NPV equal to zero; profit margin is NPV divided by EPV of premiums; DPP is the...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Common Mistakes
- Key Takeaways
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Learning objectives
- 6c
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