Effect of Changes in Underlying Assumptions
Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Present Value Random Variables for Long-Term Insurance Coverages. 8 min read, ~1,139 words.
Interest up → both and decrease (all PVs shrink with heavier discounting). Mortality up → increases, decreases (insurance and annuities move opposite). Mortality down → decreases, increases. Recursion isolates single-age changes:. Natural hedging: writing both insurance and annuities offsets mortality risk.
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 9d
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