on page 9 first paragraph reads as " if the policyholders who do not take the option have, on average, higher than select mortality, then not all of our expected losses will occur , so profit will increase." In the other paragraph of this same answer it is written that" The crucial question really is what mortality is shown by the people who do not effect the option .If these people show lighter mortality than select , the office would have made a profit on them . Can some body explain
Hello Aren't the 2 paragraphs trying to say the same thing? The first one: Would make losses on policyholders who have higher than select mortality. If policyholders who do not take option have higher than select mortality, then not all of these expected losses will occur and so overall profit will increase. The second one: Would make profit on policyholders who have lighter than select mortality. If policyholders who do not take option have lighter than select mortality, then not all of these expected profits will occur and so overall profit will decrease. Hope this helps? Best wishes Lynn
