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Term insurance formula & rounding issue

E

eevee

Member
Hi,

The textbook solutions (ST1 chapter 20 example, page 13) shows a way to calculate term insurance using the AM92 Ultimate formulae using notations like A[x], v^t, lx, l[x] and Ax.

I found that when I used an alternative formula for term insurance (using the notations M[x], Mx, D[x] from the AM92 tables), I get a slight difference to the solutions because of rounding (?).

Can someone tell me if I must use the formulae provided in the solutions or can I use alternative ones for term insurance? And if I can use alternatives, would I get penalised for rounding differences?

Cheers
 
Hi,

The ST1 exam doesn't test this sort of thing terribly often, so it's hard to say exactly what their approach will be in certain situations.

However, they do typically reward alternative valid approaches.

I hope this helps,

Anna
 
And I'd also say use as many tabulated figures as possible.
 
Anna - thanks. I won't worry too much about which approach to take then.

bystander - Mx, M[x] and D[x] are in the tables though. The solutions used a method that included even more tabulated figures A[x], v^t, lx, l[x] and Ax.
 
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