Chapter 3

Question 1

The insured lives mortality table used to establish life insurance policy reserves is:

Answer 1

standard and ordinary

Question 2

The most common life table and underwriter will encounter:

Answer 2

general population life tables and basic select and ultimate life tables

Question 3

general population life tables

Answer 3

tabulate the average annual mortality rates across large segments of the general population without regard to socioeconomic status, health, or tobacco use

Question 4

basic select and ultimate tables

Answer 4

tabulate annual mortality rates for persons insured at standard or better rates by age, sex, policy duration and frequently, by tobacco use.

Question 5

On what principles are life tables based?

Answer 5

annual mortality rates tabulated by age, sex, and other factors

Question 6

How are mortality rates for different ages calculated?

Answer 6

By observing the number of deaths occurring in the population over a specified period of time and determining the number of individuals exposed to the risk of dying during that interval.

Question 7

Excess Death Rate

Answer 7

The difference in death rates observed in the population having the impairment compared to the death rates expected in an otherwise matched population.

Question 8

Relative Mortality Ratio

Answer 8

Ratios between observed mortality rates and expected mortality rates

Question 9

Substandard ratings

Answer 9

25% of extra risk is referred to as one table.

Question 10

Flat Extra

Answer 10

Used if the excess mortality risk is thought to remain constant.

Question 11

Temporary Flat Extra

Answer 11

Used when excess mortality risk decreases with time

Question 12

Erodes the future value of fixed death benefits

Answer 12

Inflation

Question 13

The insured lives mortality table that will typically have the lowest mortality rate is:

Answer 13

individual annuity

Question 14

In calculating mortality rates, the symbol “dx” refers to :

Answer 14

the number of individuals dying during a specified interval

Question 15

Period life table

Answer 15

death rates are calculated for data collected over a relatively short period (1-3 years)

Question 16

Cohort life table

Answer 16

report the actual death rates for a group, or cohort, of individuals born around the same time.

Question 17

Limitation of all life tables, both cohort and period

Answer 17

they report only historical death rates and do not predict future death rates.

Question 18

Population life tables

Answer 18

based on death rates calculated for large segments of the population without regard for individual health, socioeconomic, or employment status.

Question 19

I(x)

Answer 19

Number of individuals alive at the beginning of an interval (x)

Question 20

E(x)

Answer 20

Exposure during an interval (number of individuals exposed to the risk of dying during the interval)

Question 21

q(x)

Answer 21

interval mortality rate (probability of death during the interval)

Question 22

disabled lives life table

Answer 22

a life table tabulating the mortality rates of persons no longer able to work due to a disability

Question 23

Select factors

Answer 23

scalar factors applied to life tables to reduce projected mortality rates

Question 24

Select period

Answer 24

the period from life insurance policy issue to the time at which the effect of underwriting is assumed to no longer be effective (20-25 years)

Question 25

Social Security (pension) life tables

Answer 25

type of population life table tabulating the mortality rates of individuals who were actively employed at some time

Question 26

Table rating

Answer 26

method used in underwriting to account for extra mortality risk by charging extra premium based on a multiple of the base premium.

Question 27

Ultimate period

Answer 27

The period after the select period when underwriting no longer has any effect (after 20 to 25 years)

Question 28

p(x)

Answer 28

Interval probability of survival (probability of survival during the interval)

Question 29

edr(x)

Answer 29

interval excess death rate (excess death rate during the interval)

Question 30

mr

Answer 30

interval mortality ratio (the ratio of the observed death rate to the expected death rate)

Question 31

l(x)

Answer 31

number of lives entering interval x (number of individuals exposed to the risk of dying at the beginning of the interval)

Question 32

L(x)

Answer 32

average number of individuals alive during the interval, x

Question 33

w(x)

Answer 33

number of withdrawals during the interval

Question 34

E(x)

Answer 34

exposure in person years (number of individuals exposed to the risk of dying during the interval x

Question 35

Interval, as in p or q

Answer 35

One of a series of successive periods of time during which mortality is studied

Question 36

Expected, as in p(x) or q(x)

Answer 36

The expected probability of survival or death during the interval x

Question 37

Aggregate annual average interval

Answer 37

the average annual probability of survival or dying over the interval

Question 38

D

Answer 38

cumulative deaths from beginning to end of interval of interest

Question 39

Q

Answer 39

cumulative overall probability of death from beginning to end of interval of interest

Question 40

P

Answer 40

Cumulative probability of survival from beginning of study to the end of interval of interest