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what is the formula to calculate excess death rate

edr = q-q'
q= observed death rate
q'= expected death rate

* in insurerd lives studies q' represents the baseline mortality assumption.


what is Relative Mortality rations? (rmr)

rations between observed mortality rates (q) and the expected mortality rates (q').

Rmr = q/q'

- they form the basis of a classification system for rating substandard mortality risks in which a table of excess mortality risk reperesents a +25 increase in risk over that expected for STD rates.


Ideally substandard premium rates would derive from what?

an analysis of insured lives mortality experienced similar to that used to set STD premium rates.
- for reliable numbers a substantial # of individuals with that impairement must be followed until death.


True or False many companies share their mortality data on substandard isseus to create pooled data for inter-company mortality studies?

True- since few companies have large enough exposure on substandard policues to allow for a meaningful analysis by impairement.


When is a table rating appropriate to assess the excess mortality cost of one or more impairements?

if the excess mortality rismk increases with each duration that the policy remains in force.
- assumed that most disease process exhibits a mortality multiple pattern of excess mortality risl


When is a flat extra an appropriate method of excess mortality cost on one or more impairements?

if the excess mortality is thought to remain constant.
ie. occupation, avocation, foreign travel


When is a temporary flat extra appropriate?

when a excess mortality risk decreases with time.
This is trypically exprtessed in terms of the average cost of extra premium per 1K of coverage and the duration in years over which the risk is expected to be present.


How is cancer rated?

1. pp'd during time of tx to assess tx results.
2. excess mortality risk is calculated on a basis that many cancers exhibit a decreasing pattern of excess mortality.
3. when cancer appears to have been cured the flat extra premium is usually dropped.


The strategy of creating a table for cancer ratings with postponed time since date of dx prior to adding flat extra, as well as calculations for years it takes for the risk to return to 0 is designed to achieve what 3 objectives?

1. PP period avoids assuming speculative risk during the earliest duration when the mortality is very high.
2. a finite period over which a more modest temporary flat extra premium is charged allows most individuals to purpose insurance at affordable prices when the risk diminishes.
3. returning to STD pricing at the later duration is designed to minimize the anti- selection that would otherwise result from selective lapsation, if extra premium were charged beyond the time when the mortality risk had returned to baseline levels.


Is it appropriate to convert temporary flat extra ratings into table ratings?

No, but it is appropriate at times to convert perm flat extras into tables ratings.


Define select factors

scalar factors applied to life tables to reduce projected mortality rates to levels thought to be attractive to potential life insurance buyers while remianing achievable through the combination of target martket selection/u/w/ancitipacted secular mortality improvements.


what is a select period?

the period from life insurance policy issue to the time at which the effect of u/w has been assumed to no longer be effective in slecting STD or better risk from amoung the entire pool of insured persons (20-25 yrs)


define the ultamate period

the period after the select period during which the effect of u/w is assumed to no longer be effective in selecting STD or better risk from the entire pool insured persons (period beyond 20-25 years after u/w)