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With drawls on Policyholder Birthday

0 votes
asked Sep 6, 2018 in BUS 3024S - Contingencies by Faith (610 points)

How would your calculation of an independent decrement rate change if you were given that withdrawls occurred on the policyholder's birthday?

1 Answer

+2 votes
answered Sep 6, 2018 by A.mabaso (670 points)
My take is that you'd make an assumption as to how birthdays are distributed throughout the year. Usually we assume birthdays are distributed evenly throughout the year. From then, most calculations would work out (at least on a large scale) if we assumed that birthdays occur, on average, midway through the year. Without knowing more about the particulars of the question, it isn't easy to give a more precise answer. But in general, assume UDB (uniform distribution of birthdays).