edu-2014-fall-exam-life-pricing-syllabus

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Updates Candidates may register online or with an application. Study notes are part of the required syllabus and are not available electronically but may be purchased through the online store. The Introductory Study Note has a complete listing of all study notes as well as errata and other important information. A case study will not be used for this exam.Past Exams from 2000-present are available on SOA website. Candidates should be sure to check the Updates page on the exam home page periodically for additional corrections or notices.

Individual Life and Annuity Life Pricing– U.S.& Canada Fall 2014& Spring 20151.Learning Objectives The candidate will understand feasibility step of new product and how it drives design. Learning Outcomes The Candidate will be able to: a) Explain considerations for successful product development

b) Describe tax regulation and perform calculations to evaluate compliance c) Identify gaps between product design and the operations of the company, its procedures and systems

d) Describe U.S. non-forfeiture regulation and perform calculations to evaluate compliance e) Recommend ways to close the gaps between design and the internal/external constraints

Resources Canadian Taxation of Life Insurance, Marino, 7th Edition, Ch. 1, 3, 14, 15. Candidates may also use the 6th edition. The same chapter references apply. Life Insurance and Modified Endowments Under Internal Revenue Code Sections 7702 and 7702A, DesRochers, Ch. 2-4, 6 2008 Supplement to Life Insurance and Modified Endowments Under Internal Revenue Code Sections 7702 and 7702A, DesRochers, pp. 3-33, 40-56, 71-81, Appendices A-C Life Insurance Products and Finance, Atkinson& Dallas, Ch. 2

LP-121-13: Life Insurance and Annuity Non-forfeiture Practices LP-122-13: NAIC Standard Non-forfeiture Law for Life Insurances: Sections 1-4, 5c, 6-9 LP-123-13: NAIC Standard Non-forfeiture Law for Individual Deferred Annuities

Individual Life and Annuity Life Pricing– U.S.& Canada Fall 2014& Spring 20152.Learning Objectives The candidate will understand the design and purpose of various product types, benefits and features. Learning Outcomes The Candidate will be able to: a) Describe in detail product types, benefits and features

b) Construct and recommend a design that is consistent with the market needs c) Evaluate the feasibility of the recommended design

Resources Investment Guarantees, Hardy, Ch. 1 LP-102-07: Equity Indexed Annuities: Product Design and Pricing Consideration LP-105-07: Life and Annuity Products and Features LP-116-10: Variable Annuities, Kalberer and Ravindran, Ch. 5, 9-11 LP-126-13: Pricing Critical Illness Insurance in Canada, Mooney LP-127-1

3: Product Design of Critical Illness Insurance in Canada EIUL: The Devil’s in the Details, Product Matters, Aug (62)2005 What’s Backing Your Life Insurance Guarantee?, The Actuary Magazine, Feb 2005 Term Mortality and Lapses”, Product Matters, Aug (62) 2005, Designing& Pricing LTCI Combination Insurance Products, Long Term Care News, Dec 2004 Annuity/LTCi Combinations, Product Matters, Oct, 2009 ASOP#2 Non-guaranteed Charges or Benefits for Life Insurance Policies and Annuity Contracts, Mar 2004 (excl. Transmittal Memo and Appendices) Quantification of the Natural Hedge Characteristics of Combination Life or Annuity Products Linked to LongTerm Care Insurance, March 2012 Life Insurance Acceleration Riders, Reinsurance Section Newsletter, July 2013, pp. 35– 38 Interesting Challenges for Insurers, Product Matters, June 2012, pp. 10– 16

Individual Life and Annuity Life Pricing– U.S.& Canada Fall 2014& Spring 20153.Learning Objectives The candidate will understand the relationship between the product features, their inherent risks, and the selection of appropriate pricing assumptions, profit measures and modeling approaches. Learning Outcomes The Candidate will be able to: a) Identify and explain the setting of an appropriate assumption for product characteristics such as the following: i) ii) iii) iv) v) vi) vii) viii) ix) Riders Policyholder dividends Equity linked Embedded options Return of premium Secondary guarantees Payout annuity benefits Crediting methodology Other non-guaranteed elements

b) Identify and explain the setting of an appropriate assumption for risk and other factors such as: i) ii) iii) iv) v) vi) vii) viii) c) Available experience data The marketplace Underwriting Distribution channel characteristics Reinsurance Expenses (fixed, variable, marginal) Taxes (income and premium) investment strategy

Analyze results and recommend appropriate action from an array of risk and profit measures such as: Statutory, GAAP, Return on Equity, Market Consistent Pricing, Embedded Value

d) Analyze the capital requirements for a product and describe solutions that optimize capital usage e) Describe when a stochastic model should be used, its advantages and disadvantages, how to build it and how to analyze its results

Resources Investment Guarantees, Hardy, Ch. 1, 2, 6, 7, 8, 12, 13

Individual Life and Annuity Life Pricing– U.S.& Canada Fall 2014& Spring 2015

Life Insurance Products and Finance, Atkinson& Dallas, Ch. 3, 8, 10, 11, 13 Stochastic Modeling: Theory and Reality from an Actuarial Perspective, IAA, Intro, I– I.B.2, I.E, II.A.1– II.A.3, III, IV.A– IV.A.9 Marketing for Actuaries: Individual Life and Health Insurance, Laporte, 2000 Edition, Ch. 4 and 6 LP-102-07: Equity Indexed Annuities: Product Design and Pricing Consideration LP-107-07: Experience Assumptions for Individual Life Insurance and Annui

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