Chapter 21: Mortality and morbidity

Question 1

65

Risk classification

Answer 1

The process by which potential insured lives are seperated into different honogeneous groups for premium rting purposes, according to the risks that they present.

Question 2

Reasons for including rating factors

Answer 2

• Reduce selection against the company.
• Satisfy the time and cost constraints of marketing.

Question 3

Merits of a mortality table with a homogeneous mix

Answer 3

• The table can be used to model the lives of groups that are suspected to have a similar experience as the homogeneous group.
• A table constructed with a heterogeneous mix would have restricted use as you would only uses it for populations with the same mix.

Question 4

Factors by which mortality and mobidity rates vary

Answer 4

• S ex
• N utrition
• A ge
• T ime period (think medical advances)
• C limate an geography
• H IV status
• E ducation
• S ocial class
• H ousing
• O ccupation
• G eographic area
• G enetics

Question 5

When can estinated mortality rates be unreliabe ?

Also give examples (occupation)

Answer 5

When deaths are not recorded in the same category as the lives exposed t risk
* Entries into the census may not be specific enough
* The families of individuals may elevate the deceased’s occupation
* Previois occupations - death certificate only relates to the most recent occupation
* Classifications - wives given their husbands’ occupation
* Lack of statistics

Question 6

Temporary initial selection

Answer 6

When heterogenity is present in a group that was selected on the basis of a criterion whose effects wear off over time

Question 7

Class selection

Answer 7

Refers to a factor that is permanent with respect to mortality - example is sex

Question 8

Time selection

Answer 8

The combines sample of data at different times will be heterogeneus

Question 9

Adverse selection

Answer 9

• Refers to the way in which groups are formed.
• People are liely o take out policies if they beleieve that they are liekly to claim.
• For example, someone will take out a term assurance if they know that they are more likely to die during that term.

Question 10

Spurious selection

Answer 10

Ascribing mortality differences to groups formed by factors that are not the true causes of these diferenece.

Question 11

Selective decrement

Answer 11

A selective decrement will select from the population lives whose rate of decrement friom another cause differs from that of the whole population