List 5-10 key assumptions that should be considered when performing a sensitivity analysis under the following...

List 5-10 key assumptions that should be considered when performing a sensitivity analysis under the following context: An insurance company selling group term insurance.

Expert Solution

The key assumptions that should be considered when performing sensitivity analysis

sensitivity of results to key assumptions about the policy holder and company behaviour.

An insurance compnay selling group term insurance :

The rate at which the policy holder policy holder will surrender the contract, especially at the tiem of non competetive interest rates.
the rate at which policy holders will continue to pay premium on flexible premium products
the assumptions regardng policy loan activity and penalty free withdrawal utilization for policy holders.
the company strategy about interest crediting ,it should have been developed using cash flow testing in the pricing of the product.
The company's reinvestment strategy
the company's practices regarding dividends to sharholders are also important.

jeff jeffy answered 2 years ago

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