Actuarial Outpost Account Value & Cost of Insurance
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 Long-Term Actuarial Math Old Exam MLC Forum

#1
09-26-2017, 05:57 PM
 ngxxx081 Member SOA Join Date: Nov 2008 Posts: 113
Account Value & Cost of Insurance

Hello - I was wondering if anyone could take a look at the attached and let me know if I have correctly set up the formulas for type A and B UL assuming crediting interest DOES NOT EQUAL mortality interest and if not provide the correction? Do I need to apply the mortality interest to the survivorship (noted in the denominator) for each duration? Intuitively when I expand and algebraically manipulate the formulas it just doesn't look fluid to me. Any thoughts?

Also I am still not quite understanding the concept of cost of insurance (COI). For the most part I feel like I have gotten away with simply just seeing this akin to the mortality assumption and can easily incorporate it into the formulas for the AV calculation, but when compounded with the i_c≠i_q assumption that's where I sort of get a little bogged down. Can anyone be kind of enough to clarify this?

This is all stemming from my attempt at the SOA fall 2014 MC test question #18 (screenshot attached). Just in case this helps provide better context for trying to understand/explain this. Appreciate everyone's time. Thank you.
Attached Images

Attached Images
 av formula.pdf (89.0 KB, 60 views)