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Chapter 17 question 8

M

Molly

Ton up Member
Hi all,

I was wondering when is it not appropriate to use the claims acceleration approximation?

in this question my approach was to use
A\bar_x:n]=(1+i)^0.5 (A_x:n] -(D_(x+n))/D_x) +(D_(x+n))/D_x)

but the solutions seem to use a first principles approach, is there a reason for this? in the exam would i not be given full credit? in the following question (q9) it seems fine to use this, so i am wondering under what circumstances do i need to use the long winded first principles approach?

Thanks
 
Hi Molly,

The claims acceleration approximation is a way of approximating the answer based on the assumption that deaths occur on average half way through the year. Question 17.8 asks for an exact value, ie not an approximate one.

Generally speaking, it should be fine to use the approximation in the exam unless the question tells you not to, or like in Q17.8, asks you to calculate an exact answer.

Thanks,
Richie
 
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