Actuarial Outpost SOA Question 11 - already figured out the problem
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#1
03-19-2014, 09:48 PM
 qanda Member SOA Join Date: Mar 2014 Posts: 72
SOA Question 11 - already figured out the problem

What's the difference between lifetime annuity a_x and a_bracket(T) where T is the future life time?

Edit: I've figured this out...but read below

My first attempt at the question was to calculate 2Ax using the variance of a_x = (2Ax - Ax^2)/delta^2 for smokers/nonsmokers respectively. Then I calculated
[weighted second moment 2Ax - (weighted Ax)^2]/delta^2
and I got a close enough answer 9.12.

Why is this approach invalid?

Edit again: I recalculated the official solution only to find out that their answer is not accurate. The solution is 9.12.

Last edited by qanda; 03-19-2014 at 10:01 PM..