Question

When calculating reserves using the gross premium valuation method, which cashflows are considered?

a.

Only past cashflows

b.

Only current cashflows

c.

Only future cashflows

d.

All cashflows regardless of timing

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).Only future cashflows Explanation:When using the gross premium valuation method, only future cashflows are considered for calculating reserves. Past and current cashflows are not included in the calculation, and only future liabilities and premiums are projected forward till the end of the policy term.

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Q. When calculating reserves using the gross premium valuation method, which cashflows are considered?
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