CT5 chapter 7

Hi,

In exam style question 7.21, part 2, why have we used ultimate mortality instead of select mortality in calculating 10p50, even though the basis used of reserve is said to be the same as that given in the question?

Thanks for your insight.

Regards,
Shyam

 

Wrong q. no

 

It is 7.21 in my material.

It should be the first question in the exam style questions of chapter 7.

Thanks!
Regards,
Shyam

 

You said part 2, i guess QnA part2
Anyways i got your point.
it reads as
Mortality : AM92 Select before age 60 means from age 40 to 60 mortality follows AM92. Now at age 50 select period does not applied. So 10P50

 

I could see that, but why didn't it apply??

Thanks,
Regards,
Shyam

 

Policy start @ age 40 and deferred for 20 years, at age 50 the reserve is PV of future payments. Payments will be starting after 10 years..so 10P50.
Here policyholder already survived from 40 t0 50 which is 10P[40]

 

Yeah, but it is AM92 Select before age 60. So shouldn't it be select, since the select is for the mortality and yet 10 years are due for him to turn 60?

Regards,
Shyam

 

No. If you do so then you are using select rates for each age.
AM92 has select period of 2 years, means after 2years the rates will be unchanged.
Mortality before the start of annuity is AM 92.

 

Can you be a bit clearer?

Thanks

 

Question is simple.
Using AM92 select for 1st 20 years and then different.
Select rates applied only for 1st 2 years.
Ex. P[40] and P[40]+1
we have asked to find provision @ 10th year.

 

Umm.. i kind of got it. could you explain me the concept of select rates?

Thanks!
regards,
Shyam