Q. How do margins contribute to reducing the risk for insurance companies?

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Q. Which approach involves incorporating margins in the assumptions for each individual parameter?

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Q. How is the investment returns assumption adjusted to include a margin?

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Q. Why is a margin taken in mortality assumptions?

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Q. How is the pricing mortality assumption adjusted for term, endowment, or unit-linked products with high death benefits?

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Q. In what scenario would a company make a loss based on the adjusted mortality assumption?

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Q. How is the pricing expense assumption adjusted to reduce the risk of adverse future experience?

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Q. How are margins incorporated into the persistency assumption for insurance products?

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Q. In the context of pricing, what does the term "stochastic approach" refer to?

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Q. How does the third approach in pricing handle risk?

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Q. In the context of risk management in insurance pricing, what is the primary concern regarding assumptions?

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Q. Why is it considered worse to underestimate mortality than to overestimate it in insurance pricing?

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Q. How does an actuary guard against the risk of underestimating mortality in insurance pricing?

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Q. What crucial factors determine the size of margins required for pricing in insurance?

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Q. How are margins adjusted in practical scenarios for insurance pricing?

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Q. Why has the use of the second approach, involving probability distributions, increased in insurance pricing?

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Q. What is the primary consideration in deriving a suitable risk discount rate for insurance pricing models?

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Q. Why do investors demand a higher expected rate of return from risky investments compared to safe investments?

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Q. What is the concept of the "risk-free" asset in economic theory?

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Q. What is the primary purpose of the Capital Asset Pricing Model (CAPM)?

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