Age rating

(Nov 17, 2017)

Back in the days before personal computers, actuaries relied solely on published tables for their calculations.  These were not just the mortality tables, but monetary functions of these tables known as commutation factors.  My old student tables from 1980 list commutation and other factors at discount rates of 4%, 6% and 8% (the latter rate seems almost comically high by current standards).  If you wanted to use a different discount rate, you would have to perform the same calculation twice and interpolate.

However, actuaries couldn't interpolate if they wanted to use higher or lower mortality rates - all monetary functions were calculated using a fixed (and implied) 100% of the rates in the stated mortality…

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Tags: age rating, Makeham-Beard

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