Model to develop a provision for adverse deviation (PAD) for the mortality risk of impaired lives

Date of Completion

January 2007

Keywords

Mathematics

Degree

Ph.D.

Abstract

This study recognizes the main components of mortality risk and treats them separately to develop a model to calculate a provision for adverse deviation(PAD). Life annuities and other long-term living benefits are the most important insurance products involving longevity risk. There are no standard mortality tables for impaired annuitants, especially for those with chronic medical conditions. Therefore it is difficult to capture longevity risk using traditional mortality projection methods. The first two chapters explain background. In Chapter 3, we develop our model. Chapter 4 examines two applications using real-world data. The PAD model can be used for any impaired insurance products where initial underwriting is necessary. ^

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