CT5- Reverse Selection

[Bharti Singla]

Hi all
Here's the screenshot of solution to qus. 1.13 of Q&A part1. I am not getting properly what they have written here. Could anyone please explain im what cases the mortality can be higher during select period than the ultimate mortality ?

Thanks

 

[Bharti Singla]

Anyone ?

 

[Robert Chadburn]

The example I think of is ill health retirement from a pension scheme. So, at the start of their retirement, the average mortality will be relatively high. The very sickest people die soon after retirement, so that a few years later the average health of the remaining pensioners will be improved. So the mortality reduces (all else being equal) the further from retirement you are. Retirement here is the selection date.

 

[Bharti Singla]

The example I think of is ill health retirement from a pension scheme. So, at the start of their retirement, the average mortality will be relatively high. The very sickest people die soon after retirement, so that a few years later the average health of the remaining pensioners will be improved. So the mortality reduces (all else being equal) the further from retirement you are. Retirement here is the selection date.

Thank you sir