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#1
10-23-2008, 01:46 PM
 Ham Member Join Date: Jan 2006 Posts: 34
Fall 2004 - 8I - Q9 (b)

Can anyone explain this solution to me? I seem to be confused by the notation and just can't really figure out what exactly is happening.

If the person is age 55.5 and waits 6 months for the waiver to start, this take his age to 56. So we need premiums (waived) for age 56, 57, 58, 59.... hence it only uses four values from the chart for the D[x+k+1/2]+s+1/2. But then the solution adds a 0.5 to the end and then multiplies everything by the \$100 premium. What is the 0.5 all about?

You can probably tell from this explanation that I don't really understand this concept so any help will be good. I am glad this part was only worth one point!
#2
10-23-2008, 01:51 PM
 rekrap Member SOA AAA Join Date: Apr 2004 Posts: 21,816

I believe the .5 at the end is related to the fact that the benefit is retroactive to the date of disability, so that even though there is a 6-month waiting period, half the age 55 premium is included (since paid continuously throughout the year).

The fact that it's all multiplied by 100 is because that's the premium and you are calculating the benefit which waives all those premiums.
#3
10-23-2008, 02:01 PM
 LifeAct Member SOA AAA Join Date: Aug 2006 Posts: 10,226

If the benefit goes until age 60, why don't we waive the age 60 premium?
#4
10-23-2008, 02:15 PM
 rekrap Member SOA AAA Join Date: Apr 2004 Posts: 21,816

Quote:
 Originally Posted by LifeAct If the benefit goes until age 60, why don't we waive the age 60 premium?
Until, but not including? State your assumption and move on.
#5
10-23-2008, 02:24 PM
 LifeAct Member SOA AAA Join Date: Aug 2006 Posts: 10,226

Quote:
 Originally Posted by rekrap Until, but not including? State your assumption and move on.
good idea.

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