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IAI Actuarial Core Principles · Risk Modelling and Survival Analysis · Concepts of survival models

In a mortality table with a select period of 2 years, the select mortality rate q[x] is applied to a life aged x who has just taken out a policy. Which statement best describes the ultimate part of the table?

The ultimate part of a select table gives mortality depending only on attained age once the duration since selection has passed the select period. By then the initial underwriting effect has worn off, so q[x]+r equals q(x+r) for r beyond the select period.

  1. AIt gives rates that depend on age attained only, once the duration since selection exceeds the select periodCorrect
  2. BIt gives rates that depend on duration since selection only, not on age
  3. CIt gives rates that apply only to lives who have lapsed their policies
  4. DIt gives rates that are always higher than select rates at the same attained age
  5. It gives rates that apply only during the first year after policy inception

Explanation

After the select period ends, the effect of underwriting has worn off, so mortality depends only on attained age. Hence q[x]+r equals q(x+r) for r at or beyond the select period. The option claiming dependence on duration only is wrong because attained age remains the key variable.

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