Death Strain At Risk

Hi,

Slightly confused here

In the Core Reading (Chpt.5 Section 9.1) DSAR is defined as:
"the maximum death strain"
(so the maximum of 0 on survival or the cost arising on death)


However several questions (e.g. assignment X2.8) seem to treat DSAR as a straight cost arising on death


So if there's no survival benefit the former definition gives 0 as the DSAR and the latter gives a negative number - which is right?

Thanks

 

The CR in section 9.1 is trying to get across that you don't use the zero as the DSAR. Since the specific case referenced at this point is a contract with a death benefit and no survival benefit, this is the maximum of 0 and S - V(t+1).

Other cases may be different - in particular when survival benefits are introduced.

In general, we ignore the zero (be this by taking a maxmium or a minimum). I think this is what you mean when you comment that the DSAR is the cost arising on death.

So, looking at the pure endowment in X2.8 - this has no death benefit, only a survival benefit, giving a negative DSAR.