Monday, July 1, 2047

Index page for Time Step

Time Step

Time step is important. Devil in the details.

1. Introduction to Time Step
2. Monthly Conversion
3. Coupon in GCV
4. Age Nearest Birthday (ANB) vs Age Last Birthday (ALB)
5. Monthly vs Yearly investment income
6. Reconciliation between monthly and yearly model

Index page for Embedded Value

Embedded Value

Embedded Value

1. Stochastic Model
2. Time Value of Option and Guarantees (TVOG)
3. Cost of Non-Hedgeable Risk (CNHR)
4. Embedded Value (EV)
5. Market Consistent Embedded Value (MCEV)

Index page for Solvency Margin

Solvency Margin

Solvency Margin, capital.

Index

1. Introduction to Solvency Margin
2. Solvency Margin
3. Cost of Capital
4. Present Value of Distributable Earnings (PVDE)
5. Leakge Test II
6. Solvency I vs Solvency II

Index page for Profit

Profit

Profit, it is your earnings!

Index

1. Introduction to Profit
2. Gross Profit and Profit
3. Present Value of Future Profit (PVFP)
4. Leakage Test I
5. Retained Earnings
6. Reserving, Investment Income and Profit

Index page for Product Features

Product Features

Some may think that there are too many insurance product features in the world to be summarized in one book. I partly agree with it: as long as one understand its principle, it is not hard to find out that all product features are in deed similar. They are only variation of cashflows (as we have introduced the generalized cashflow model).

The truly varying part of product features, can be summarized below:

1. Whether some roll-forward balance(s) are needed
2. The base of the payment (Premium or Face Amount or Underlying Items)
3. The conditions that payment will be delivered

However difficult, we will introduce some commonly seen product features (in Asia) below, including both Traditional Life (TL) and Universal Life or Unit Linked (UL).

Junior actuaries are always confused because they are not familiar with insurance product features, and they can only learn them through work or search them online. I hope this blog can summarize all the useful product features for you as a reference.

Index

TL product features

1. Introduction to Traditional Life (TL)
2. Return of Premium (ROP)
3. Waiver of Premium (WOP)
4. Dividend on Deposit (DoD)
5. Revisionary Bonus (RB)
6. Accelerated Critical Illness (ACI)
7. Multiple Claim Critical Illness (MCCI)
8. Mortgage Reducing Term Assurance (MRTA)

UL product features

9. Introduction to Universal Life / Unit-linked (UL)
10. Premium Holiday
11. Partial Withdrawal
12. Account Value
13. Crediting rate and Fund growth rate
14. Cost of Insurance and other deductions
15. Loyalty Bonus
16. Fee Income Approach

Index page for Discounting

Discounting

Discount rate is complicated...

Index

1. Introduction to Discounting
2. Methods of Discounting
3. Timing of Cashflows
4. Best Estimated Liabilities (BEL)
5. Investment Income
6. Risk Neutral vs Real World Discount
7. Myth of "Earn = Discount"?

Index page for Reserving

Reserving

Reserving is complicated...

Index

1. Introduction to Reserving
2. GPV Reserving
3. Commutation Functions
4. NPV Reserving
5. FPT Reserving
6. CRVM Reserving
7. Zillmerization

Index page for Cashflows

Cashflows

Here we will introduce cashflows. Cashflow is important that it is the basic unique for many calculation afterwards, including reserving, profit and solvency margin. Cashflow is also the physical flow of value in and out of the insurance companies (not the decrements!!!). Understanding the calculation of cashflow is the basic for all subsequent actuarial calculations.

Index

1. Introduction to Cashflows
2. Premium Income
3. Benefit Payments
4. Guarantee Cash Value
5. Policy Value Table
6. Expense
7. Commission
8. Tax
9. Non-guarantee benefits
10. Generalized Cashflow model

Index page for Decrement

Decrement Model

Life contingency is an unique subject in the actuarial profession. The core component of it, the life decrement model, is well covered in some textbook such as "Actuarial Mathematics" or exam such as MLC.  However, the textbooks and the exams are sometimes too theoretical, and lack practical details for junior actuaries to apply them in their daily work.

Index

1. Introduction to Decrement Model
2. Types of Decrements
3. Select and Ultimate Table
4. Single Decrement Model
5. Double Decrement Model
6. Triple Decrement Model
7. Terminal and Non-terminal States
8. Generalized Decrement Model