7702 QAB/term rider Clarity

[Abused Student]

Oh, and the way to think about your answer and why it was wrong, QAB's increase the amount people are able to pay and still qualify. If you divide by a number greater than one, you will be decreasing what they can pay. Adding will always increase as long as the charge is positive and if they are going to ask about a negative charge they are smoking crack.

[surdahl]

But my example wasn't dividing by a number greater than one. My example was (1-load-QAB charges). Regardless, it's wrong.

Next question: Since the child rider was only 5 years, the equation only reflected it for 5 years (thank you bballry for the clarification on the recalc note being in the wrong place!). If the rider were in place for 7+ years, how would these formulas change?

[Abused Student]

Originally Posted by surdahl

But my example wasn't dividing by a number greater than one. My example was (1-load-QAB charges). Regardless, it's wrong.

Next question: Since the child rider was only 5 years, the equation only reflected it for 5 years (thank you bballry for the clarification on the recalc note being in the wrong place!). If the rider were in place for 7+ years, how would these formulas change?

Oh, ok, you were dividing by (1-.05-10) or -9.05.

(bballry? I thought I said that. Did I miss him saying it too?)

If it lasted all 7 years it would be appropriate to include it (second equation, first answer) without having to recalc. That would be the max allowed so using the first equation (second answer) would be less so still acceptable, at least to the gov't IMHO. The policies would be MECs which the customers might not like though so I would assume it could hurt some sales.

[surdahl]

LOL sorry my brain hurts, you said it, not bballry

And yah I guess dividing by -9.5 wouldn't work out too well! When I originally wrote the problem I was assuming the charge would be a percentage of premiums, similar to the loads (which is why 1-loads works).

[Bballry1234]

Originally Posted by surdahl

LOL sorry my brain hurts, you said it, not bballry

And yah I guess dividing by -9.5 wouldn't work out too well! When I originally wrote the problem I was assuming the charge would be a percentage of premiums, similar to the loads (which is why 1-loads works).

Haha, credit falsely given and then stolen back!

Surdahl, it's best to use MLC type first pricinciples for these types of problems. For example, the 7 pay test is the PV(benefits) + PV(QAB) charges divided by ax:7, which isolates a 7pay premium. As long as you spell out the formulas BEFORE you use the provided numbers, you can still max out your point capabilities.