Actuarial Outpost Reserve Formals quick question
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#1
10-02-2017, 11:19 AM
 LRoss716 Member SOA Join Date: Nov 2012 Studying for Exam C Posts: 87
Reserve Formals quick question

Is the following correct:

If I use the insurance formula
(A_x+t - A_x) / (1 - A_x)

do i multiply that by the Death Benefit for the reserve.

Also, If I use the annuity formula
1 - (a_x+t / a_x)

do i multiply that by the Premium for the same reserve?

Thanks.
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#2
10-02-2017, 01:09 PM
 TCUMath Member SOA Join Date: May 2013 Location: DFW Studying for MFE College: Alum Posts: 91

Quote:
 Originally Posted by LRoss716 Sorry if this question has been asked already. Is the following correct: If I use the insurance formula (A_x+t - A_x) / (1 - A_x) do i multiply that by the Death Benefit for the reserve. Also, If I use the annuity formula 1 - (a_x+t / a_x) do i multiply that by the Premium for the same reserve? Thanks.
You multiply both by the Death Benefit.

If you take the basic (prospective) formula for determining a net reserve:
Reserve @ time x+t = BA(x+t) - Pa(x+t)

*where B is benefit and P is premium

and begin substituting for P and either A(x+t) or a(x+t), then you will get to the annuity reserve and insurance reserve formulas.

You will see both formulas multiply by the Death Benefit at the end.
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Last edited by TCUMath; 10-02-2017 at 01:13 PM..