Question

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

a.

By subtracting the margin from the best estimate mortality assumption

b.

By multiplying the best estimate mortality assumption with the margin

c.

By adding the margin to the best estimate mortality assumption

d.

By dividing the best estimate mortality assumption by the margin

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).By adding the margin to the best estimate mortality assumption Explanation:For such products, the pricing mortality assumption is calculated by multiplying the best estimate mortality assumption by one plus the margin. This adjustment accounts for the potential variability in actual mortality rates compared to the expected values.

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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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