Seems we have to define everything before answering the question?

Hi,
Just looking at Assingment X2 solution, X2.3 part (v)
The question just asks "explain the likely rationale for the following correlation assumptions (a) longevity and mortality"
The solution defines longevity and mortality and the products these risks affect. Marks are awarded for this.
The question didn't actually ask for a definition nor which products may be affected, only what the rationale for the correlation was.

It just seems like we are making up our own questions to get marks but how on earth are we meant to know for which questions we need to define each term before actually answering it?! Are we meant to demonstrate to examiner that we know something about mortality and longevity before discussing them?

 

Firstly this is an assignment and not necessarily a past exam question. Whilst assignments try as far as possible to mimic exam questions they also are a learning process and so the answers/marks may have slight differences. But more generally, when writing any answer look at the marks available and the instruction word. Here it is explain so you need some degree of 'meat' in the answer. Longevity and mortality are both interested in the timing of a death, but the risk is different. Longevity relates to annuities so how long a person will live (or persons in the case of joint life/reversions etc) and hence how many payments will be made as part of the liability. With protection business (term assurance etc) its the number of years that will elapse before death when the benefit crystalises that's key. So the link is death/life expectancy but it has a different significance to each and the risk of gettingit wrong differs. So understanding and showing this in your answer is important. Does this help at all?

 

Thanks. Isn't mortality the inverse of longevity in a verbal sense, not in an actuarial sense exactly because of underwriting for mortality risk products like term assurance and less so for longevity products like annuities?