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Cm1 april 2014

A

Anu Joshi

Active Member
Hello. In question 13 of ct5 april 2014.
Part ii)
I'm unable to derive the GFLRV for the death benefits.
The solution given in ASET is :
60,000* (1.0192308)^(t + K30+t ) v^T30+t.
I don't understand why is K30+t used.
If we use both t & K30+t . We wouldn't get the correct benefit at that time.
For eg : a policyholder dies at time 2.5
So the K30+t will be 2 and t will we 2.5
So the power of (1.0 192308) will be 2+2.5 which is incorrect. So can anyone explain me this?
 
Hi Anu
It is correct. Your error is in your value of K30+t. In your example K30+t is K32. This is 0 if the policyholder dies at time 2.5 as no complete years are survived. Therefore the bonus will be (1.0192308)^2+0, which is correct.
Bev
 
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