Effect of Changes in Underlying Assumptions on Reserves and Premiums
Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Premium and Policy Value Calculation for Long-Term Insurance Coverages. 7 min read, ~1,079 words.
Higher mortality always increases the whole life reserve: and, both push reserve up. Lower interest generally increases the reserve: benefit EPV is more interest-sensitive than premium annuity. Re-valuation: premium is fixed at original assumptions; only future and change. Most dangerous scenario: higher mortality + lower interest (both push reserves up)...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 10d
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