Modelling Extra Risk
Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Premium and Policy Value Calculation for Long-Term Insurance Coverages. 10 min read, ~1,462 words.
Age rating: use age in all standard formulas, simplest, no new formulas. Constant addition to force: gives. Substandard annuity = standard annuity at. Premium increases by exactly. Constant multiple:. No closed-form shortcut, compute numerically. Fails if. Constant addition = constant absolute extra risk. Constant multiple = constant relative extra risk.
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 10e
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