IAI Actuarial Core Principles · Risk Modelling and Survival Analysis · Mortality projection
Mortality projection methods are often grouped as extrapolative, explanatory and expectation approaches. Which of the following correctly describes the extrapolative approach?
The extrapolative approach projects future mortality by extending trends seen in past data. It differs from explanatory methods, which model causes and risk factors, and from expectation methods, which use expert judgement about future improvements.
- AIt assumes future mortality improvements follow trends observed in past mortality dataCorrect
- BIt models mortality using the causes of death and risk factors such as smoking
- CIt relies on expert opinion about the future pace of medical progress
- DIt sets future rates equal to the latest life table with no change
- It uses only cross-sectional data from a single calendar year
Explanation
Extrapolative methods project future mortality by continuing patterns found in historical data. Explanatory methods use cause-of-death or risk-factor models, and expectation methods use expert opinion. Holding rates fixed is not extrapolation of a trend.
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