Interview Preparation

Disscuss with fellow Actuarial forum members about what is being asked in Actuarial Interviews
Rakshasaraf
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07 May 2018, 11:20

I understand why it will be highest for Endowment followed by Whole life. But didn't understand why pure followed by term?

ShikhaAgarwal
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07 May 2018, 13:44

Rakshasaraf wrote:I understand why it will be highest for Endowment followed by Whole life. But didn't understand why pure followed by term?
As far as I know, it is because at any age probability of survival is more than prob of death. And Hence, prob of claim payment in pure is more than term.

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arpit
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23 Aug 2018, 19:22

ShikhaAgarwal wrote:Highest to Lowest;
Endowment-whole-pure-term

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True, I would like to add on the reason behind this, the reason is Present Value

In Endowment, the payment is sure and made within n or at n years making it highest Pv.

In whole, the payment is also sure, but the time is not, so PV is less than endowment . So making it less chapter than endowment but costlier than pure or term since payment is sure.

In pure, the payment is made on survival after n years and people generally survive after n years making it expensive than term but because some people die, so 100% payment is not made. Thus making it cheaper than endowment or whole.

In term, this is the cheapest of all and thus have most sales. Only some people die in a span of n years, making the PV less than anyone else.

P. S- One of my teacher told me that this question is often asked in interview

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