Question

How are first-year withdrawal rates calculated?

a.

By dividing the number of contracts issued in the last financial year by the number that survive in force until the first policy anniversary

b.

By subtracting the number of contracts surviving until the first policy anniversary from the total number of contracts issued in the last financial year

c.

By dividing the number of contracts surviving until the first policy anniversary by the total number of contracts issued in the last financial year

d.

By adding one to the inforce rate obtained by dividing the number of contracts surviving until the first policy anniversary by the total number of contracts issued in the last financial year

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (d).By adding one to the inforce rate obtained by dividing the number of contracts surviving until the first policy anniversary by the total number of contracts issued in the last financial year Explanation:First-year withdrawal rates are calculated by subtracting the inforce rate obtained by dividing the number of contracts surviving until the first policy anniversary by the total number of contracts issued in the last financial year from one.

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