Use deterministic profit testing to assess emerging surplus for equity-linked life insurance cash flows, 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 Embedded Options in Life Insurance and Annuity Products. 45 min read, ~6,726 words.

Profit vector is per-in-force end-of-year emerging surplus. Profit signature is per-issue, with. NPV discounts at the risk discount rate (not the earned rate). IRR is the RDR that zeroes NPV. Profit margin equals NPV divided by EPV of premiums. Issue strain goes negative when acquisition cost exceeds initial charges and...

What this lesson covers

• Content
• Example 1
• Example 2
• Example 3
• Example 4
• Example 5
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• 7e

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