I am confused as how to interpret whether or not a decrement is independent or dependent. In April 2005 Q13 it explicitly says both decrements are independent. So we develop the dependent decrements from these. However, in April 2008 Q13, the answer assumes the independent decrement and dependent mortality decrement is the same. However we still need to calculate the dependent withdrawal decrement. How can we infer from the April 2008 Q13 that the independent and dependent mortality decrement are the same?? How do we infer that the surrender decrement give is independent too if it doesnt explicitly say it. Cheers
Hi joe90, April 2008 Q13 - the answer does NOT assume that the independent decrement and dependent mortality decrement is the same. The question tells you that they are... "The policyholder may surrender the policy only at the end of each policy year." There is only one decrement happnening over the year, ie death. It's rate is not dependent on anything so the independent rate = dependent rate Good luck! John
but at the end of year,you're exposed to competing decrements of death and surrender,you could surrender before you can die!
