Interest Rates

[Cynic]

I bumped my head on the wall the other day, and now everything is blank. Anyway, could someone please let me know how I can convert a life insurance (Ax) calculated using 6% interst rate (as in the Illustrative Life Table) to another life insurance with the same mortality assumptions but at 5% interest rate?

Any help would be greatly appreciated.

[Gandalf]

No one will be able to help. It cannot be done without much more info.

[Dr T Non-Fan]

For constant force assumption, divide by e^(0.01).
Otherwise, it might be a little work.

[Gandalf]

For constant force assumption, divide by e^(0.01).
Otherwise, it might be a little work.

A little work otherwise?

Constant force can be done (not by your method, but by solving for mu and then solving for Ax), but in general (e.g. Cynic mentioned the Illustrative Life Table) there are no formulas.

If you know how to calculate Ax at 5% from the mortality assumption (e.g., constant force, maybe some other special cases), you can have a shot at getting from Ax at 6% to Ax at 5%. But for a typical mortality table, or a situation where the mortality assumption is not known, knowing Ax at 6% does not help calculate Ax at 5%.

[Toonces]

It can't be done with the Ax, but you still can do things with the q's on the illustrative life table, since the q's aren't dependent on the interest rate. For example, if the question was to calculate Ax for a 3-year term policy at (50) using the illustrative life table and a 5% interest assumption, you can solve this easily just using i and the q's.

[Cynic]

Thank everybody for responding. I just need to confirm that I can't do this given only the Illustrative Life Table. I thought I read a question like this somewhere, but I might be wrong. Hopefully there would be no such questions on the real exams.