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SOA Exam LP > NEED TO KNOW > Flashcards

NEED TO KNOW Flashcards

1
Q

Factors which drive parameter risk

A

sampling risk
data bias
model misspecification
assumptions not 100% credible

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2
Q

LTC Risk reduction through prod design

A
  1. Reduce Benefits
  2. ROP
  3. Combo product
  4. Benefits/Prem indexed to CPI
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3
Q

QABs

A

FAG W

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4
Q

Substandard Mort - 7702

A
  1. Multiplicative - mort = rating * std charge
  2. Additive (subs mort = guar mort + margin btw guar and current COIs)
  3. Current subs charges
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5
Q

Scope of 101(g) and 7702B

A
  1. Chronic Illness ADBs and QLTCI Riders
  2. Standalone QLTCI
  3. Terminal Illness ADBs
  4. Critical illness and other ADBs are not covered
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6
Q

Approaches to calculating NF Bens prospective

A
  1. Whole Contract
  2. Persister
    3/ Unlike retrospective, equity maintained
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7
Q

Bens ignored in considering pols guar bens

A
  1. Disability
  2. AD+D
  3. Child term rider
  4. Term rider that would not apply
  5. Other policy benefits
  6. Reversionary annuity bens
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8
Q

Ins reg mx

A

CNSF/CONDUSEF

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9
Q

Ways regulators can help mitigate risk

A
  1. Implement early warning systems
  2. Pass new laws
  3. Hire more staff
  4. Refine accrediation stds
  5. Enforce existing regs
  6. Implement PBR
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10
Q

Process to conduct PM experience study

A
  1. Project scope
  2. Data collection and validation
  3. Initial factor analysis
  4. Model building
  5. Model validation
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11
Q

Strategies for strategically valuable blocks

A

PURAA

  1. Persistency programs
  2. Upsell programs
  3. Reinsurance programs
  4. Adjust NGEs
  5. Adjust inv mix
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12
Q

Conditions that must be met in order to adj rates on IF customers

A
  1. Poor experiece
  2. Chance of antiselective behavior low
  3. Adjustment will result in cash gen
  4. Regulators will allow
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13
Q

Strategies for non-strategically valable blocks

A
  1. Exchange programs
  2. Buyout programs
  3. Outsourcing ongoing admin
  4. Selling the block
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14
Q

Pol form filing consists of

A
  1. transmittal letter
  2. specimen pol form
  3. readibility cert
  4. descr of variable items
  5. AM
  6. required discloseures to PH
  7. Filing fee
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15
Q

Steps to generate expr assumptions

A
  1. Identify the assumption required
  2. Determine the structure of the assumption
  3. analyze experience and trends
  4. Review and adjust for reasonablness, consistency, appropriateness
  5. Document
  6. Monitor and update assumptions
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16
Q

Trad experience study

A
  1. Determine appropriate experience preiod
  2. Data gathering and scoping
  3. Determine an appropriate expected basis
  4. Calculate A/E’s
  5. Present results
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17
Q

Adjust similar experience to reflect1

A

MR CUD

  1. market
  2. reinsurance
  3. company UW standards
  4. UW class
  5. Dist channel
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18
Q

Criteria for a good cred model

A
  1. Practical to apply
  2. No double counting or ommission
  3. All relevant data used
  4. Results reasonable in extr cases
  5. subcategory A/E’s are reasonable
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19
Q

Methods to end mort table

A

FBPL

  1. Forced
  2. Blended
  3. Pattern
  4. Less than one
20
Q

Behavioral economics principles

A

DEVS

  1. Decision shortcuts
  2. Value assessments
  3. Emotional Impacts
  4. Social impacts
21
Q

Decision shortcuts

A

RRMF

  1. Relative choices
  2. Reliance on defaults
  3. Mental accounting
  4. Framing
22
Q

Value Assessments

A

LEAH

  1. Love of free
  2. Endowment effect
  3. Anchoring
  4. Hyperbolic discounting
23
Q

Emotional Impacts

A
  1. Risk Adversion
  2. Overconfidence
  3. Self-Control facilitation
  4. Hot vs Cold states
  5. Loss Aversion
  6. Self-Herding
24
Q

Social Impacts

A
  1. Social/Financial domains

2. Bandwagon

25
Q

Data error detection techniques

A 
FAS 100
1. Frequency distribution
2 Automation
3. Samplnig
4. 100 records
26
Q

Expense allocation bases

A

TITAES

  1. Transaction
  2. Activity
  3. Time study-based
  4. Expense
  5. Inforce
  6. Staff
27
Q

Buyer oriented

A

PNSS

  1. Penetration
  2. Neutral
  3. Segmented
  4. Skim
28
Q

Competitor Oriented

A

IC AOP

  1. Independent
  2. Cooperative
  3. Adaptive
  4. Opportunistic
  5. Predatory
29
Q

Pretax stockholder earnings

A

= prodCF - BenResInc-DACAmort-InvIncome-InvIncRC

30
Q

AT Stockholder earnings

A

= PreTaxStockEarn - Tax - TaxInvIncRC - DefTaxProv

31
Q

Reins for Annuities

A
  1. YRT
  2. Reserves released
  3. Tail
  4. Coinsurance
32
Q

Principles of Costing

A

CoRe DoCU

  1. Comprehensive
  2. Review/approval process
  3. Documented
  4. Comprehensive
  5. Unbiased
33
Q

The costing process

A
  1. Discovery
  2. Scoping
  3. Business case and development
  4. Testing and validation, incl Sens analysis
  5. Documentation and approval
  6. Launch
  7. Post-launch
34
Q

Solutions for decr term

A
  1. Limited pymt decr term
  2. Decr prem scales
  3. Make DB level after period of time
  4. Prem = DB * OY rate
35
Q

Ways to cover subs mort

A

FLAT Return

36
Q

Bailout pricing

A

Value of option = cost of excess lapses + lost SCs + cost of artifically supporting a high credited rate

Approximate cost = avg lost SC * excess lapse rate * prob of trigger

Total option cost = cost of option + cost of addl RS

37
Q

Key elements of preferred UW

A
  1. Alcohol and drug abuse
  2. Blood pressure
  3. Build
  4. Cholsteral
  5. Fam history
  6. MVR
  7. Personal medical history
  8. Tobacco use
38
Q

Div actuary’s responsability

A
  1. Sign sched M
  2. Recommend div scale
  3. Reccoment agg div to distribute
  4. Must distribute in proportion to major SOE
  5. If board chooses not to follow DA’s rec, disclosed
39
Q

SOE that drive div scale

A

TEMP RIM

  1. Taxes
  2. Expenses
  3. Mortality
  4. Persistency
  5. Reinsurance
  6. Interest rates
  7. Mergers
40
Q

Div scale methods

A
  1. Pegging
  2. Subs
  3. Expeicne prem method
41
Q

Key risks for LCTI

A
  1. Persistency
  2. Investment
  3. Inflation
  4. Morbidity
42
Q

CI exclusions

A
  1. Self inflicted
  2. Drinking and driving
  3. Drugs
  4. Criminal offense
  5. Two year misrepresnetation
43
Q

Life ins acc riders

A
  1. Terminal illness
  2. Chronic illness
  3. Critical illness
44
Q

EIA reserving

A
  1. AG33
  2. AG35

a. BV based - hedged as required (Enhanced discounted intrinsic method), book value of hedging instrument basis for reserve
b. type 2 - MV based - CARVM with updated mkt values method, no hedged as req criteria met

45
Q

Key risks for annuity

A

CLOT VRD

  1. Credit
  2. Longevity
  3. Operational
  4. Tax/legal/reg
  5. Various
  6. Reinvstment
  7. Disintermediation

SOA Exam LP (1 decks)

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