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in BUS 3024S - Contingencies by (1.7k points)

Hi,


Q3(c) they work out the select +1 assurance and annuity values the method they gave. But why can't we just take the select +1 values off the table if they are given? for A[35]+1 and a(ad)[35]+1.


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1 Answer

+1 vote
by (1.2k points)
Hi,

The values they calculate recursively are essentially the same as the values from the tables. I am making an assumption that this test question (and so the memo) may have been taken from another year where they did not include all columns present in the table (so would need to use the recursive formula). 

I will confirm with the staff though.

Until then
by (1.7k points)
Regardless of what they required, if they wanted A:[35]+1 would we look on the row of age 36? and then extract the value in the A:[x]+1 column?
by (1.7k points)
Thank you. Because it seems the values have a bit of difference. And this is what was supplied in test (including the table shown).
by (1.2k points)
We look at row x = 35.

For A[x]+1:

x is not the age, (x+1) = age. It's just we look at x = 35 to get the correct substitution in for A[x]+1 to get A[35]+1, as we are dealing with select lives. Look at what x is being substituted into on the columns.

So their calculation for A[35]+1 = 0.100999457

and table version for A[35]+1 = 0.10099
by (1.7k points)
Oh I see that makes sense. Then don’t worry about asking the staff.

Last thing: if we are trying to find q(x)+1 for example we would look at the row x+1. Why is it different for this Assurance case? 

Thanks for all the help Keenan.
by (1.2k points)
The way you look up anything in these tables relates to when the select life enters the policy and how long the select period it. 

Example:

q[20] means age 20, just entered policy and is in first year of select lives. - look at row x=20 for q[x]

q[20]+1 means age 21, in policy for a year, second year of select lives. - look at x=20 for q[x]+1

q22 means age 22, now we stop caring about when entered because select life has worn off. - look at x+2=22 for qx+2
by (1.7k points)

Im just confused because my method has always been to look at row x for q[x] and x+1 for q[x]+1. In chapter 27 of Acted (Possibly different for you: its the Reserving aspects of profit testing chapter) 27.6 of practice questions they work out the probabilities the method i listed above. But if I were to stay on the same age=x row it wont reflect the same values. Please explain this. It makes use of AM92 select.image

by (1.7k points)
so q[55] is in row x=55 first column, and q[55]+1 is row x=56 column 2.
by (1.2k points)

Hotseat - Select lives.pdf (0,4 MB)


The tables are defined differently. Look at what the actual subscripts for l,d,q,p mean. Stop looking at x alone, interpret what the subscripts mean when substituting x values in.

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